Answers · UK 2025/26
How are UK mortgage interest rates set?
UK mortgage rates are set by lenders based on: the Bank of England Bank Rate (base rate), SONIA swap rates (for fixed deals), the lender's funding cost, your LTV (deposit %), credit score and the type of deal (fixed/tracker/variable).
Full answer
UK mortgage interest rates 2025/26 are influenced by multiple factors. Bank of England Bank Rate (currently 4.25% as of May 2025) — directly affects tracker mortgages and Standard Variable Rates (SVR); indirectly affects fixed deals via swap rates. SONIA swap rates — the wholesale market price that lenders pay to hedge fixed-rate lending; 2yr and 5yr swaps drive fixed deal pricing more directly than Bank Rate. Lender margin — covers profit, risk, capital requirements (typically 0.5–1.5%). LTV (loan-to-value) — best rates at 60% LTV or below, premium of 0.3-1.5% at 95% LTV. Credit score — perfect credit gets advertised rates; minor issues = +0.2%, major issues = +1-3% or specialist lender. Deal type — fixed deals (2/3/5/10 year) currently 4.0-5.0% best buys; tracker rates Bank Rate + 0.5-1.5%; SVR typically 6.5-8.0%. As of 2025 markets price in further BoE cuts; 5-year fixes around 4.0-4.5% for 60% LTV. Always compare APRC, not just headline rate.
Try the calculator
Related guides
More answers
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.