UK mortgage rates have traced a dramatic arc over the past 35 years — from double digits in the early 1990s, to historic lows around 1% in 2021, to a sharp spike above 6% in 2023, and now a gradual descent back toward 4–5% in 2026. Understanding this history helps current borrowers make better decisions about fixing versus tracking rates.
2-Year Fixed Rate Mortgage — UK History
| Year | Average 2-year fix | Bank of England base rate | Key context |
|---|---|---|---|
| 1990 | ~14.0% | 14.88% | Post-ERM crisis, Black Wednesday approaching |
| 1995 | ~8.0% | 6.5% | Mid-90s normalisation |
| 2000 | ~6.5% | 6.0% | Dot-com boom, stable rates |
| 2005 | ~5.2% | 4.75% | Pre-financial crisis, strong economy |
| 2008 | ~6.0% | 5.0% → 2.0% | Global financial crisis hits late 2008 |
| 2009 | ~3.5% | 0.5% | Emergency rate cut, quantitative easing begins |
| 2012 | ~3.5% | 0.5% | Rates plateau at historic lows |
| 2015 | ~2.5% | 0.5% | Continued post-crisis suppression |
| 2017 | ~2.0% | 0.25% → 0.5% | First small rate rise in decade |
| 2020 | ~1.8% | 0.1% | Covid emergency cut — joint historic low |
| 2021 | ~1.2% | 0.1% | All-time low for UK mortgage rates |
| 2022 | ~3.5% | 0.1% → 3.5% | Rate hiking cycle begins; Truss mini-budget spike |
| 2023 | ~6.5% | 5.25% | 14-year high — fastest rise in modern history |
| 2024 | ~5.0% | 5.25% → 4.75% | Rate cutting cycle begins August 2024 |
| 2026 | ~4.5% | ~4.25–4.5% | Gradual normalisation continues |
5-Year Fixed Rate Mortgage — UK History
| Year | Average 5-year fix | Notes |
|---|---|---|
| 2010 | ~4.5% | Relatively stable post-crisis |
| 2015 | ~3.0% | Low rate era, 5-year fix popular |
| 2019 | ~2.4% | Sub-2% deals emerging |
| 2021 | ~1.5% | Historic lows across all terms |
| 2022 | ~4.5% (year-end) | Sharp rise following base rate hikes |
| 2023 | ~5.5–6.0% | Peak of the cycle |
| 2024 | ~4.5% | Easing as cuts priced in |
| 2026 | ~4.3% | Further gradual reduction |
The 2022–2023 Mortgage Rate Shock
The rise from 1.5% to 6.5% on 2-year fixes between 2021 and 2023 was the sharpest sustained increase since the late 1980s. For a homeowner with a £250,000 mortgage:
| Rate | Monthly payment (25yr) | Annual cost |
|---|---|---|
| 1.5% (2021 fix) | £1,000 | £12,003 |
| 4.5% (2024 remortgage) | £1,390 | £16,681 |
| 6.5% (2023 peak) | £1,688 | £20,256 |
| Extra cost vs 2021 | +£688/month | +£8,253/year |
This mortgage payment shock — an additional £500–£800/month for many households — was a major driver of the cost of living squeeze in 2023–2024.
Tracker Rates vs Fixed Rates — Historical Comparison
Tracker mortgages follow the Bank of England base rate (typically base rate + 0.5–1.5%). They fell sharply from 2009–2021 as base rate hit 0.1%, making them very cheap — but then rose steeply in 2022–2023.
Fixed rates reflect gilt yield expectations rather than just the current base rate. In periods of uncertainty (like post-Truss), fixed rates can rise sharply even before base rate moves.
| Period | Tracker advantage | Fixed advantage |
|---|---|---|
| 2010–2020 | ✅ Often cheaper than fixes | Predictability |
| 2021 | ✅ Both at historic lows | — |
| 2022–2023 | ❌ Rose sharply as base rate rose | ✅ Those with long fixes protected |
| 2024–2026 | ✅ Starting to benefit from cuts | ❌ Pricing in cuts more slowly |
What This Means for Buyers in 2026
- Current rates (~4.5%) are historically mid-range — above the 2010–2022 low era, well below 1980s–90s peaks
- Fixing now (2-year or 5-year) protects against any unexpected rate rises while rates are still declining
- Trackers make sense if you believe base rate will fall further and quickly — but add payment uncertainty
- The typical 2024–2025 mover who fixed at 5–6% should see lower rates available at remortgage in 2026–2027
For help deciding: mortgage types explained UK, how interest rates affect your mortgage, and Bank of England base rate history.
Related Guide
Your home may be repossessed if you do not keep up repayments on your mortgage. PocketWise provides information and guidance, not financial advice. Seek independent mortgage advice before making decisions about borrowing.