Will Interest Rates Rise?

If you’re wondering whether interest rates will go up again or finally start to come down, you’re not alone. After years of rate rises, things are beginning to shift.

As of 7 August 2025, the Bank of England’s official interest rate (called the Bank Rate) is 4.00%. That’s after a small cut of 0.25% earlier this summer.

But what happens next? Will rates go back up or start to fall more? Let’s take a look.

What’s happening with interest rates?

The Bank of England uses the interest rate to try and control inflation the rate at which prices rise.

Over the past couple of years, interest rates have gone up sharply to help bring inflation under control. But now, inflation has started to fall, and the Bank has signalled it may slow down or even start cutting interest rates over the next year.

How do interest rates affect your mortgage?

Fixed-rate mortgages

If you’re on a fixed-rate mortgage, your monthly payments will stay the same until your deal ends. No matter what happens to interest rates. But when your deal ends, you’ll have to look for a new mortgage and that’s when today’s interest rates will matter.

Tracker, variable or SVR mortgages

If you’re on a tracker, variable or standard variable rate (SVR) mortgage, your payments can change when the Bank Rate changes. If interest rates go up, so could your repayments. If rates fall, your payments might drop too, though this depends on your lender.

Even small rate changes can make a big difference. For example, on a £200,000 mortgage, a 0.25% rate rise could cost around £30–£40 more per month.

Are mortgage rates coming down yet?

Not quite. Although the Bank Rate has been cut slightly, mortgage rates haven’t dropped much. Lenders are still being cautious because of ongoing economic uncertainty.

Here’s what we know:

• Mortgage rates are still higher than they were a few years ago.
• According to government figures, the average 5-year fixed rate mortgage was around 4.53% earlier this year.
• Your rate will depend on things like your credit score, deposit size, and how long you want to fix for.
• Some lenders may lower rates if the Bank cuts interest rates again later this year or in 2026.

Will interest rates rise again?

Right now, it looks unlikely that rates will rise again in the short term. The more likely outcome is that they’ll stay where they are or fall slowly over the next year or two, depending on inflation.

But things can change quickly. The Bank of England has said it will raise rates again if needed to stop inflation rising too fast.

What should I do now?

• Check your mortgage deal: Know when your current deal ends and what type you’re on.
• Explore your options: If your fixed rate ends soon, it’s a good idea to shop around now.
• Use our: Mortgage Quotes to compare offers quickly.
• Plan ahead: Even if interest rates come down, it might take a while to feel the benefit.

FAQs

What is the Bank Rate?

It’s the interest rate set by the Bank of England. It influences how much banks charge to borrow and how much they pay on savings.

When will interest rates come down?

Possibly late 2025 or into 2026, depending on inflation and the wider economy.

Will my mortgage go down if rates are cut?

If you’re on a tracker or SVR mortgage, yes, it could. If you’re on a fixed rate, it won’t change until your deal ends.

Should I fix my mortgage now?

It depends on your situation. If you want certainty, a fixed rate might suit you. But if you think rates will fall further, a tracker could be worth considering. Always do the maths or speak to a mortgage adviser.

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Last Updated: September 26th, 2025