What’s The Latest With UK Mortgage Rates? – Forbes Advisor UK

The Bank of England held its Bank Rate at 5.25% on 14 December in a move that was widely expected by market experts. The Rate was also held in previous announcements since it rose to its current level in August 2023.

Having undergone 14 consecutive rises between December 2021 (when interest rates stood at just 0.1%) and last August , the Bank’s latest decision is further evidence that we may have reached the top of the rate-rise cycle. The next interest rate announcement will be on 1 February 2024.

The plateau in interest rates has largely been made possible by cooling inflation. The latest figures from the Office for National Statistics show that inflation stood at 4.6% in October, having plummeted from 6.7% in September. We’ll get the next set of inflation data on 20 December, when a further fall is expected.

Rate-rise cycle

Mortgage costs first rocketed in the autumn of 2022 after former Prime Minister Liz Truss’ mini-Budget triggered market uncertainty and sent the pound crashing to historic lows. It caused mortgage lenders across the board to hastily pull deals, bringing them back to market at much higher prices.

While mortgage costs then underwent a downwards correction, in the spring of 2023 lenders began putting up the cost of deals again as Bank Rate continued on its relentless climb in the face of soaring inflation.

But, as inflation has continued to cool and interest rates have remained flat, the cost of fixed rate mortgages began to edge down from its peak. Recent weeks in particular have seen a fresh flurry of lenders reducing costs for remortgagers, purchasers and buy-to-let landords.

Average cost of popular deals

How much can borrowers expect to pay?

According to our mortgage partner Better.co.uk, the average two-year fixed rate deal across all borrower types* stands at 5.26%, with three-year deals averaging 5.16%. The average cost of a five-year fixed rate today stands at 5.01%.

The best deals in each of these categories are 3.99% (two years), 4.74% (three years) and 4.34% (five years).

The average two-year tracker rate mortgage is priced at 5.60%, with the best in this category priced at 5.39%.

The typical standard variable rate (SVR) stands at 7.89%, according to Better. This compares to around 4.78% in July 2022.

You can get up-to-speed with what might happen to mortgage rates next year with our 2024 forecast round up.

In terms of mortgage availability, as of 1 December there were 5,694 residential mortgage deals on the market, according to Moneyfacts. This is a rise on the 5,678 on 1 November as lenders reintroduce deals in a settling market.

Interest rates and…