Average UK Mortgage Rates Reach 5.89% Ahead of Bank of England Decision
Key Facts
The average rate on new mortgage products in the UK was 5.89% on November 4, up from 5.83% at the start of October, according to Moneyfacts figures reported by Mortgage Soup. The reading came ahead of the Bank of England’s interest rate decision, scheduled for the following day. The last time the average was higher was in November 2023, when it reached 6.07%. The increase puts housing finance costs in focus ahead of the Monetary Policy Committee meeting. Separate data also showed that the effective interest rate on new mortgages continued to rise in September.
The average rate on two-year fixed mortgages was 5.97% on November 4, compared with 4.83% at the start of 2026, according to the report, citing Moneyfacts. The rate reached its highest level since December 2023. The report estimated that a borrower taking out a £250,000 mortgage to be repaid over 25 years would pay an additional £169 a month compared with the start of January. The example reflects the impact of higher rates on monthly payments for new borrowers or those refinancing. Across the wider market, the effective interest rate on new mortgages rose to 4.63% in September from 4.60% in August.
The effective cost of existing mortgages also rose, with the interest rate on outstanding mortgage balances reaching 4.03% in September, compared with 4.00% in August, according to the Bank of England. In borrowing activity, net borrowing for house purchase by individuals fell to £3.9 billion in September from £4.2 billion in August. The figure was below the six-month average of £4.9 billion. Approval data showed a divergence between home purchases and refinancing: approvals for remortgaging with a different lender rose to 42,600 in September from 34,000 in August. This measure covers only remortgaging with a new lender.
By contrast, annual UK house price growth slowed to 0.5% in October, its slowest pace since January 2024, according to the Nationwide index. Prices were unchanged from the previous month. The slowdown in price growth coincided with rising mortgage costs, while September data showed a decline in net borrowing for house purchase by individuals. On inflation, consumer prices rose 3.5% in the 12 months to September, compared with 3.1% in the corresponding period to August, according to the Associated Press. September’s reading was the highest since October of the previous year.
Motor fuel prices rose 30% year on year in September, following an annual increase of 23% in August, according to the Associated Press, with transport prices contributing to the rise in inflation. The Bank of England said in September that consumer price inflation was 3.1% in August and was likely to rise further over the following quarters. The bank added that the monetary policy stance needed to achieve the inflation target would depend on the size and duration of the energy shock. The Monetary Policy Committee held the interest rate at 3.75% at its September meeting by a majority of 6 votes to 3. The three dissenting members voted to raise the rate by 0.25 percentage points to 4%.
Most economists expected the interest rate to rise to 4% at the November 5 meeting, after it was held at 3.75% at the previous meeting, according to the Associated Press. Reuters also reported, via Euronext, that investor bets included three to four further quarter-point increases in 2027, taking the rate to a range of 4.75%-5.0%. The Bank of England is scheduled to publish the Monetary Policy Committee meeting summary and minutes, along with the Monetary Policy Report, on November 5. Rachel Springall of Moneyfacts said a calmer outlook for interest rates could allow fixed mortgage rates to edge lower before the end of the year. She added that this could prompt lenders to reconsider sharp increases.