Mortgage rates guide

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If you’re thinking about applying for a mortgage or remortgaging, this page is for you. If you’re already with us and want to manage your mortgage, head to our existing customers page.  

Mortgage rates guide

A mortgage rate – or mortgage interest rate – is the amount of interest you’ll pay on the money you borrow to buy a property. The rate on your mortgage is shown as a percentage. For example, you may have an interest rate of 4% per month.

Mortgage rates are often linked to the national interest rate, but they’re not the same thing. 

  • Interest rate – The percentage of interest you pay for any kind of borrowing.
  • Mortgage rates – The interest rate for a mortgage deal.
  • Base rate – The interest rate set by the Bank of England.

Our guide will explain what mortgage rates are, how they’re set and the different types of mortgage rate that might be available to you. 

What are mortgage rates?

Mortgage rates are the interest rate you’ll be offered as part of your mortgage deal. Lots of things can affect which mortgage rate you are offered:

  • Your personal circumstances
  • Type of mortgage you’re looking for
  • National base rate

Here’s how the mortgage rate is set for five common mortgage policies.

Fixed Rate Mortgage

As the name suggests, the mortgage rate for fixed mortgages stays the same for a set time period.

This is usually between one to five years. It means you pay the same percentage of interest on your monthly repayments during that time.

Variable Rate Mortgage

The interest rate on a variable rate mortgage can change during your policy. It means your payments can go higher or lower each month. These are not linked directly to the base rate, but can be influenced by changes to it.

Tracker mortgage

A tracker mortgage is a type of variable rate mortgage that is linked directly to the Bank of England base rate. As the base rate rises or lowers, so do your repayments.

Capped mortgage

Capped mortgages have a set limit on the mortgage rate applied to your deal. This means your repayments won’t go over a certain amount each month. Your rates could also drop if interest rates drop, so you’ll pay less.

Offset mortgage

The rates for offset mortgages can be either fixed or variable. The mortgage is linked directly to your savings, which are used to reduce the amount of interest paid on your mortgage.

Use our mortgage interest rate change calculator to work out how much your monthly payments could be if your interest rate changes. 

What impacts the mortgage rates offered to you

Every lender will consider different criteria, but these are some of the common elements they’ll look at when deciding which interest rate to offer.

Credit history

Your credit score influences the mortgage rate you’re offered, as it shows your track record of paying off loans and whether you’re likely to keep up with your mortgage repayments.

Deposit size

The money you borrow when you take out a mortgage is worked out by taking away your deposit from the purchase price of your new home. A higher deposit gives a better loan to value ratio. A better loan to value ratio means you’ll probably be offered lower interest rate deals.

Length of the mortgage term

If you choose a mortgage that’s repaid over a shorter period, you may have higher monthly payments, but pay less interest.

If your mortgage repayments are spread over a longer time, you may pay less on your repayments, but more interest. A mortgage adviser can help to recommend a term that works for your circumstances. 

How are mortgage rates set?

Mortgage rates are usually set in line with the base rates and national interest rates, which are set by the Bank of England and other financial institutions.

Base rate

This is set by the Bank of England. Mortgages linked to base rates can see repayments change, depending on the Bank of England’s decision to change the base rate. The base rate only directly impacts tracker mortgages but can affect other variable interest rates too. Find out more about the base rate here.


Lenders tend to change their mortgage rates based on national interest rates. But many lenders will take lots of factors into account when offering an interest rate for a mortgage.

How often can rates change?

The rates on variable mortgages can sometimes change. The Bank of England monetary policy committee usually meets every six weeks to discuss the base rate, though doesn’t always change it. Tracker rates will follow the movement of the Bank of England base rate.

Fixed rate mortgages will stay the same for a set period of up to ten years. 

The content on this page is for reference and does not constitute finance advice.

For impartial financial advice, we recommend government bodies like the MoneyHelper.

Calculators & tools

We have a range of mortgage calculators to help you:

  • Find out how much you could borrow from Lloyds Bank
  • See how much you could save if you make overpayments on your mortgage
  • Get an idea how a change to the Bank of England Base Rate could effect your monthly payments

Use our mortgage calculator and tools >

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