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UK mortgage rates drop despite 14th BoE rate rise

Many UK mortgage lenders have decided to cut rates in spite of continued base rate rises from the Bank of England

A photo of Grace Lynch, the author

By Grace Lynch

Published on: 8 August 2023

3 min read

UK mortgage rates drop despite 14th BoE rate rise

Current Bank of England Base Rate5.25% (as of 03/08/23)
Previous Bank of England Base Rate5.0%
Expected Interest Rate Peak5.75% (by end of 2023)

As many economists predicted, the Bank of England voted for yet another rise to UK interest rates last week. This is the 14th consecutive rise which leaves the UK’s rates at their highest level since 2008.

But what does this mean for mortgages? Several mortgage lenders have actually cut rates over the last few weeks with much speculation that the higher rates have now peaked.

There has been a lot of turbulence and uncertainty in the mortgage market during 2023, so the potential for lower rates will be welcome news for many homeowners and aspiring buyers.

More about mortgages:

Last Thursday (3rd August), the Bank of England voted to raise UK interest rates for the 14th consecutive time. This puts rates at the highest level in 15 years since the global financial crash of 2008.

The UK’s inflation rate still sits at 7.9% which is far higher than the ideal figure for economic growth (2%).

With inflation still at stubbornly high levels, the Monetary Policy Committee (MPC) voted to raise interest rates again to combat this. Inflation has started to fall (though at a slower rate than is ideal). This means there is potential for the Bank of England to begin lowering rates, or at least stop increasing them by the end of the year.

Why have lenders cut mortgage interest rates?

Lenders have cut interest rates as although the BoE rate is consider, rates are also affected by ‘SWAP rates’.

A SWAP rate is used by lenders to assess what they think interest rates will be in the future. As inflation begins to drop, it’s becoming more likely the BoE will decrease, giving lenders more confidence to decrease their rates.

House prices have also been continuously dropping in recent months. House prices have not fallen at such a considerable rate since 2009, where according to Savills UK house prices dropped by 20% within 16 months.

Which lenders have cut mortgage interest rates?

Several mortgage lenders have decided to cut rates to try and encourage growth in the mortgage market – and prevent a crash if possible.

Is now a good time to get a mortgage?

This is difficult to say as there are definite pros and cons to consider. House prices are low and certain lenders have cut rates, meaning it’s possible that there will be some good deals available.

If you can lock in a good, fixed rate deal now might be the time to do so. With UK base interest rates consistently rising, there’s no telling whether the lower rates currently on offer will still be available in a few months. If Bank of England base rates continue to rise, it’s possible many lenders will end up raising rates again.

Our best suggestion would be to talk to an independent mortgage broker if you have any questions about getting a new mortgage or remortgaging your home.

Related articles

Here is all the latest mortgage news affecting homeowners and buyers in the UK:

To keep up with that latest mortgage updates, check out our MPO News page.


Bank of England – Interest Rates and Bank Rate

Nationwide – Bank of England base rate changes and your mortgage

Statista – Average interest rates for mortgages in the UK (2000 – 2023)

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