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What Is a Good Mortgage Rate in the UK?

Written by, Marija Petkova

Updated September, 2, 2022

Your mortgage rate directly affects your mortgage payments and determines how much you need to pay every month, until the end of the term. 

So, what is a good mortgage rate in the UK and when is it the best time to strike a mortgage deal?

Let’s find out.

What is the Average Mortgage Rate in the UK?

The current base rate of interest, set by the Bank of England (BoE), is 0.50%. The BoE base rate is the official borrowing rate in the UK.

Why Are Interest Rates Rising?

The Bank of England increased the average interest rate on mortgage twice in the last several months, in December 2021 (0.25%) and February 2022 (0.50%), due to rising inflation in the UK and on a global scale. 

The good news is that the rates fell drastically in 2021, to an all-time low of 0.1%, in order to help the economy stay afloat during the COVID-19 pandemic. This means that the increase starts from a low base and there are still plenty of decent offers available.

The not-so-good news is that the Bank of England might increase the base rate of interest again to meet a possible further hike in inflation.

Here’s a table to compare how mortgage rates have changed over time.

DateThe Rate

The lowest mortgage rates in the UK were on March 19, 2020 (0.10%), and the highest on November 15, 1979 (17.00%).

Best 2 Year Fixed Rate Mortgage

At 1.49%, Barclays has the lowest rate on two-year fixed rate mortgages

It’s available for both purchases and remortgaging, requires a 40% deposit, and an arrangement fee of £999.

This rate is a significant increase from the lowest rate on a two-year fix, compared to February figures.

Best 3 Year Fixed Rate Mortgage

As of now, the lowest three-year fix across the entire UK is at 1.79% with Nationwide, which is up from the 1.44% rate in February.

It can also be used for both remortgages and purchases, comes with an arrangement fee of £999, and requires at least a 40% down payment.

Best 5 Year Fixed Rate Mortgage

Lloyds Bank has the best mortgage rates for 5-year fixed in the UK  at 1.66%, with a 40% deposit and a £999 arrangement fee. It is only available for remortgaging. 

 The current lowest mortgage rates for purchasing a home are a bit higher. The lowest is Leeds Building Society’s 1.74% rate. It requires an arrangement fee of £1,999 and a 40% deposit. 

First Direct offers the same rate, but you’ll need a 40% down payment and a £490 booking fee.

Best Variable Rate Mortgages

Variable rate mortgages are charged differently. 

The lowest possible rate for variable-rate mortgages is 0.89% with Furness Building Society’s two-year discount. It requires a 40% deposit and a £1699 product fee.

The rate is lower than that offered by Accord Mortgages last month (1.09%) on its two-year discounted standard variable rate (3.4%). There was a 25% deposit requirement and a £495 setup fee, and it was available for purchases and remortgages.

What Else Do I Need to Know About Mortgage Rates

The first thing that mortgage lenders look for in applicants is a strong credit history and a decent income. 

To get the best rates possible, you’ll need to commit to a large deposit. While mortgage rates fluctuate on a daily basis, the lowest rates are generally available for larger deposits of over 60% or more of the property’s value.

Another way to get a good mortgage rate is to pay fees. Fees are generally associated with mortgage offers with the lowest rates. You can pay them beforehand or add them to your loan.

Is It a Good Time to Remortgage?

While some of the market’s lowest mortgage packages have vanished in recent months, there are still a few outstanding rates available.

However, if you want to remortgage, you might want to grab a deal as soon as possible. 

It’s a good idea to consult with a broker who can go over the alternatives with you and help you figure out if remortgaging or moving to a fixed-term mortgage deal is a good idea.

Bottom Line

After dropping to an all-time low, interest rates are on the rise again, due to inflation in the UK and on a global level. If you’ve decided to remortgage or buy a property, there are still some good deals available, especially for 5-year fixed rate mortgages.

Frequently Asked Questions And Their Answers

 Will mortgage rates continue to rise?

The short answer is yes. The Bank of England is expected to raise the base interest rate, so if you’re considering a new mortgage, now could be the right time.

When does the base rate change?

The base rate changes based on the state of the economy. It’s set by the Monetary Policy Committee, which meets every six weeks to decide whether to keep the current rate or change it.

 What is a good mortgage rate in the UK?

The lowest rates are available for deals that require larger down payments, typically around 60% or more of the property’s value. You’ll also need to show a solid and regular income and a good credit score.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.