Effective rate on newly drawn mortgages rose for the first time since February 2025

The effective interest rate on newly drawn mortgages rose to 4.20% in November, up from 4.17% in October, according to the Bank of England's Money and Credit release published on 5 January 2026¹. The Bank said this was the first increase since February 2025, when the rate stood at 4.53%¹. The effective rate is the actual interest paid, rather than a headline or advertised rate¹.

The rate on the outstanding stock of mortgages, which reflects what existing borrowers pay across all loans, was 3.90% in November, up from 3.89% the previous month¹.

Net borrowing of mortgage debt by individuals increased to £4.5 billion in November, after a decrease of £1.0 billion to £4.2 billion in October¹. Gross lending fell by £0.6 billion to £23.7 billion, while gross repayments fell by £3.1 billion to £19.4 billion¹. The annual growth rate for net mortgage lending rose to 3.3% from 3.2%, the highest since January 2023¹.

Net mortgage approvals for house purchase, an indicator of future borrowing, fell by 500 to 64,500 in November. Approvals for remortgaging with a different lender rose by 3,200 to 36,600¹.

"The 'effective' interest rate – the actual interest paid – on newly drawn mortgages increased for the first time since February 2025 (4.53%), to 4.20% in November from 4.17% in October."

Bank of England, Money and Credit, November 2025¹

Consumer credit also grew. Net borrowing of consumer credit by individuals increased to £2.1 billion in November from £1.7 billion in October, with credit card borrowing of £1.0 billion, up from £0.7 billion¹. The annual growth rate for credit card borrowing rose to 12.1% from 10.9%, the highest since January 2024¹.

Measure	October	November
Effective rate on newly drawn mortgages	4.17%	4.20%
Effective rate on outstanding mortgage stock	3.89%	3.90%
Net mortgage borrowing	£4.2bn	£4.5bn
Net consumer credit borrowing	£1.7bn	£2.1bn
Annual credit card borrowing growth	10.9%	12.1%

Source: Bank of England, Money and Credit, November 2025¹

On savings, households deposited an additional £8.1 billion with banks and building societies in November, up from £6.7 billion in October¹. The effective interest rate paid on individuals' new time deposits fell to 3.81% from 3.84%, while the rate on the outstanding stock of time deposits was 3.36%, continuing a downward trend since September 2024¹. The rate on the outstanding stock of sight deposits fell to 1.75% from 1.77%¹.

The effective rate on new personal loans to individuals rose for the fourth consecutive month, to 8.68% from 8.39%¹. The rate on interest-charging credit cards rose to 21.60% from 21.54%, and the rate on interest-charging overdrafts fell by 21 basis points to 21.57%¹.

Why it matters for households

Anyone taking out a new mortgage in November paid slightly more on average than those who drew one in October, at 4.20% against 4.17%¹. That is the first rise since February 2025, though the rate remains well below the 4.53% recorded then¹. Borrowers on existing deals are not directly affected by the newly drawn rate; the rate on the outstanding stock of mortgages was 3.90%¹.

Households carrying credit card balances saw the effective rate on interest-charging cards edge up to 21.60%, and annual growth in card borrowing reached 12.1%, its highest since January 2024¹. Savers opening new time deposits saw the rate on offer fall to 3.81%, while the rate on the stock of sight deposits slipped to 1.75%¹. First-time buyers and those remortgaging face the same newly drawn rates as other borrowers; remortgage approvals rose in November while purchase approvals fell¹.