What’s Going On With Interest Rates Right Now?

What’s going on with interest rates? Understand the latest changes and what they mean for your mortgage plans.

Interest rates are one of the biggest drivers of how much your mortgage will cost, but the way they’re talked about in the news can feel confusing or even contradictory. One headline says rates are rising, another says cuts are on the horizon.

So what’s really going on with interest rates right now — and what does it mean for you as a buyer or homeowner?

How interest rates are set

In the UK, the Bank of England base rate plays a key role in shaping mortgage rates. When inflation is high, the Bank tends to increase the base rate to cool spending. When the economy slows, the base rate may be lowered to encourage borrowing.

Why rates have been changing recently

Over the last few years, we’ve seen sharp movements in interest rates. High inflation has pushed rates up, but with signs that inflation is easing, there’s growing debate about whether rates will fall in the months ahead.

What higher rates mean for borrowers

When interest rates rise, mortgage repayments become more expensive. This can reduce how much buyers can borrow and increase costs for those on variable rates or coming off a fixed deal.

What lower rates would mean

If rates start to fall, affordability improves. Buyers may be able to borrow more, and monthly repayments could drop — but lenders may still remain cautious, meaning affordability checks stay tight.

The uncertainty factor

Markets and forecasts often change quickly. Trying to predict the ‘perfect moment’ to buy or remortgage is almost impossible. Instead, it’s about understanding your own position and planning around it.

The Bottom Line

Interest rates will always move up and down. What matters most is how those changes affect your personal plans — whether you’re buying your first home, moving, or remortgaging.

Your home may be repossessed if you do not keep up repayments on your mortgage or other loan secured against it.

• How often do interest rates change?

  The Bank of England reviews rates around every six weeks, but mortgage lenders can adjust theirs more frequently.

• Do all mortgage lenders follow the Bank of England base rate?

  Not exactly. Lenders use the base rate as a guide but also factor in their own costs and risk appetite.

• Should I wait for interest rates to fall before buying?

  It depends on your situation. Rates may fall, but house prices or competition could rise in the meantime.