Current Mortgage Interest Rates Today UK – December 2023

By Kristian Derrick

Last Reviewed: 14th December 2023

The Bank of England’s Monetary Policy Committee (MPC) base rate currently stands at 5.25%

Ultimately, the MPC’s base rate does influence mortgage interest rates and can ultimately increase the cost of homeownership.

If you’re a mortgage holder or are considering buying a home, read on as we explore how the base rate increase affects the average mortgage interest rates in the UK and how to ensure you get the best rates available.

What are the Current Mortgage Rates?

Assuming a 75% loan-to-value (LTV), as of December 2023, some lenders are offering a mortgage rate for a two-year fixed deal in the UK as low as 5.69%, while the rate for a five-year fixed mortgage deal can be as low as 5.17%.

The standard variable rate (SVR) currently stands at 8.29%, and the rate for a two-year variable mortgage with a 75% LTV is 5.59%.

Please note that these rates can vary depending on the lender and specific mortgage product.

Lenders are increasing rates as the market adjusts to the increase in the base rate, while others are pulling deals advertised before the rise.

If you’re considering mortgaging or remortgaging, now is the time to shop around for the best deals to avoid missing out.

How Does the Base Rate Impact Average Mortgage Interest Rates?

The Base Rate usually influences other interest rates in the UK, including mortgage, loan, and savings account rates.

Tracker mortgages directly follow the base rate, so if you have a tracker mortgage, you can expect mortgage rates to go up in line with the increase. However, not all mortgage rates will increase despite the base rate increase.

Interest rates for fixed-rate mortgages usually remain the same, and providers tend to adjust their rates ahead of time to account for increases.

Therefore, the knock-on impact of the base rate increases will not affect fixed-rate mortgages in the same way as tracker mortgages.

If you’re on a fixed-rate deal, your mortgage rate will stay the same for the duration of that deal.

With standard variable rates (the rate you automatically move to when your fixed term expires), there is no direct link with the base rate.

However, you’ll be at the lender’s mercy throughout the mortgage’s lifetime.

They can increase or decrease with the base rate or according to the whims of your mortgage provider.

Related quick help remortgage guides: 

Are Interest Rates Going to Increase Again?

The Bank of England notes that the future is uncertain.

Although accurate predictions are difficult, factors like economic uncertainty and rising inflation show that further interest rate hikes are likely in 2023 to get inflation back down to the 2% target.

The BOE uses interest rates to manage inflation.

When inflation is low, it lowers the base rate to make loans more affordable and encourage spending and borrowing.

When inflation is high, they raise the base rate, which increases overall interest rates in the UK economy.

Increasing the interest rates makes it more expensive for people to borrow money and buy things. It encourages people to save rather than spend in the overall economy.

When more people spend less on services and goods overall, the prices of commodities will tend to rise more slowly, translating to a lower inflation rate.

The BOE’s Monetary Policy Committee (MPC) decides on the actions to take and meets up several times each year to make the next interest rate decision.

What Should You Do if Interest Rates Increase?

Further interest rate increases can be scary as they can translate to higher mortgage costs.

A few actions you can take include:

Fix Your Mortgage

A fixed-rate mortgage can protect you from future rate rises and ensure your mortgage repayments don’t change because of interest rate changes.

A fixed-rate mortgage offers a fixed interest rate for a certain period, and you’re guaranteed to pay the same amount every month.

Fixed-rate mortgages allow borrowers to know exactly how much they pay each month without worrying about unexpected changes.

With rising interest rates and inflation still high, more interest rate rises are likely, resulting in higher mortgage rates that cause your monthly repayments to go up if you don’t fix your mortgage beforehand.

You can choose how long you want to fix your mortgage. Two-year fixes are cheaper and usually provide more freedom and access to the best rates.

They’re suitable if you want to switch deals regularly or are considering moving home soon.

Consider how long you want to commit to an agreement and whether your circumstances are likely to change soon.

Lock in a New Rate

You can lock in a new rate if you’re due for a remortgage in the next six months, then switch when your deal ends and avoid early repayment charges.

Most lenders set an initial lower fixed interest rate for some time as an incentive to encourage you to apply.

If you can get a new incentive period or deal at substantially lower rates than you currently pay, you can save money by remortgaging.

What Should You Do If Interest Rates Decrease?

If the interest rates decrease while you’re already fixed on your mortgage, you can miss out on the benefits of a lower rate.

A few actions you can take to ensure your options remain open include:

Fix for A Shorter Period

Fixing your mortgage for a shorter period is suitable if you suspect the interest rates or your situation will change soon.

It provides more flexibility and makes it easier to remortgage sooner if you want to switch to a new deal, especially if interest rates have reduced by the end of the fixed term.

Choose a Variable Rate Mortgage

Variable-rate mortgages feature fluctuating interest rates that go up and down and are usually influenced by the BOE base rate.

A suitable type is a tracker mortgage, typically linked to the base rate, and any rise or fall has a knock-on effect on your interest charges.

You’ll benefit directly if interest rates fall, but you’ll also face higher rates if they increase.

Mortgage Rates Today Final Thoughts

Keeping up with changing interest rates can help you choose the best strategy to keep mortgage costs down now and in the future.

As the base rate and mortgage rates continuously change, getting expert advice from a mortgage advisor or broker with whole-of-market access can ensure you make an informed decision.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Jo is in charge of our remortgage team. Jo knows how to find the best deal, even if it’s with your existing lender, she’ll let you know.

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