How Mortgage Interest Rates Are Calculated
Mortgage rates often seem unpredictable. One month they fall, the next they rise, and headlines quickly blame inflation, global markets, or central banks. But behind every advertised percentage is a structured calculation. Understanding how mortgage interest rates are determined can help you time your application wisely and negotiate with greater confidence. If you are researching the UK mortgage market, platforms such as https://smartcitymortgages.co.uk/ provide valuable insight into how lenders price their products for first-time buyers, homeowners switching deals, and property investors. The Foundation: The Bank of England Base Rate At the core of UK mortgage pricing sits the Bank of England base rate. This benchmark rate influences how much it costs banks to borrow money. When the base rate rises, lenders’ funding costs typically increase. When it falls, borrowing becomes cheaper. Mortgage lenders adjust their products in response to changes in the base rate, but not always i...
