UK Mortgage Rates Surge Amid Bank of England Hike, House Prices Fall
Mortgage rates in the UK have seen a significant rise, with major lenders such as NatWest, Santander, and Nationwide increasing their rates. This comes amidst a 16-year high for the Bank of England's interest rate, contributing to a hike of over 0.2 percentage points for two and five-year fixed deals. House prices have begun to fall in response.
As of September 2025, typical fixed mortgage interest rates range between 3.6% and 4.2% per year, with building loan interest rates fluctuating between 3.0% and 4.5%. For government bonds, a one-year federal bond yielded about 1.9%. Average mortgage rates have crept up by almost half a percentage point over the last two months, with uncertainty over Bank of England interest rate cuts and lenders avoiding a surge in customer numbers contributing to the rate hikes.
Despite the increase, the number of mortgage products available has risen to 6,546 as of 30 April. However, affordability remains a challenge, particularly in southern England, as highlighted by Go.Compare research.
While some providers like Skipton Building Society have cut rates for certain products, the outlook suggests mortgage rates will remain high. Experts predict significant cuts from June, while others anticipate smaller reductions later in the summer. The impact on house prices, which have already started to fall, will be closely watched.
