UK interest rates have dominated financial headlines for more than three years, reshaping mortgages, savings, and household budgets. As borrowing costs begin to ease, many readers are now asking a new question: when will UK interest rates go up again, or has the peak already passed?
What do UK interest rates actually mean?
A simple definition
UK interest rates are set by the Bank of England’s Monetary Policy Committee (MPC) through the Bank Rate, often called the base rate. This is the rate at which commercial banks can borrow money, and it acts as the foundation for:
- Mortgage interest rates
- Savings account returns
- Personal loans and credit cards
- Business borrowing costs
When the Bank Rate changes, lenders adjust the rates they offer consumers, although not always immediately or by the same amount.
Why the Bank Rate matters
Even a small movement in the base rate can have wide-ranging effects. For example:
- A 0.25% rise can add hundreds of pounds a year to mortgage repayments
- A cut can reduce borrowing costs, but lower savings income
- Expectations of future rate changes can move markets before the Bank acts
This is why the question of when UK interest rates will go up matters beyond economists and investors.
Background: how UK interest rates reached this point
Why did rates rise so sharply?
UK interest rates rose aggressively between late 2021 and 2023 as inflation surged to levels not seen for decades. The Bank of England responded by lifting rates repeatedly to slow price growth and stabilise the economy.
Key drivers included:
- Higher global energy and food prices
- Supply chain disruptions
- Strong post-pandemic demand
- Rising wage pressures
The objective was clear: return inflation towards the Bank’s 2% target, even at the cost of slower growth.
Why are rates now lower than their peak
By late 2024 and into 2025, inflation had fallen substantially, giving the Bank room to begin easing policy. Rate cuts were introduced cautiously, reflecting concerns that inflation could return if policy was loosened too quickly.
This shift explains why many households are now asking not only when rates will fall, but also whether they could rise again.
When will UK interest rates go up again?
The short answer
At present, there is no confirmed timetable for UK interest rates to rise again. The Bank of England has signalled that future decisions depend entirely on economic data rather than a fixed path.
In simple terms:
- Rates are lower than their recent peak
- Further cuts are possible if inflation continues to ease
- Rate rises would only return if inflationary pressures re-emerge
What would trigger another rate rise?
For interest rates to go up again in the UK, several conditions would likely need to occur:
- Inflation stops falling or rises again
If prices begin increasing faster than expected, the Bank may need to tighten policy. - Wage growth remains too strong
Pay growth that outpaces productivity can fuel persistent inflation. - Economic demand rebounds sharply
Strong consumer spending and rising house prices could reignite inflation risks. - Inflation expectations drift higher
If households and businesses expect higher inflation, it can become self-reinforcing.
Until these risks become clear, the Bank is likely to remain cautious.
When will UK interest rates go down again?
Many readers are equally interested in the opposite question: when will UK interest rates go down again, and by how much?
The current outlook
Most economists expect:
- Gradual, not rapid, rate cuts
- A prolonged period where rates remain above pre-pandemic lows
- No immediate return to near-zero interest rates
This suggests that while rates may continue to fall, they are unlikely to collapse back to the ultra-low levels seen between 2010 and 2021.
Will interest rates keep falling in the UK?
The answer depends on inflation trends. If inflation continues easing and economic growth remains subdued, interest rates could keep falling gradually. However, any sign of renewed price pressure could halt or reverse that path.
Read our explainer on whether the UK is heading for a recession for more context on how growth risks can affect sterling and markets.
Will UK interest rates go down in 2025?
What markets and analysts expect
Looking specifically at 2025:
- Modest rate reductions were already delivered
- Further cuts are possible but not guaranteed
- The Bank has stressed it will not rush
Most forecasts suggest that UK interest rates may edge lower or stabilise in 2025, rather than rise sharply.
Why rates may not fall quickly
Several structural factors limit how far rates can drop:
- Government borrowing levels
- Persistent services inflation
- Global interest rate trends
- Financial stability concerns
This means households should plan for a world where borrowing costs remain higher than the pre-2020 norm.
Why this matters for UK households
Mortgages
For mortgage holders:
- Tracker and variable rates respond fastest to Bank Rate changes
- Fixed-rate mortgages reflect market expectations, not just current rates
Anyone remortgaging in 2025–2026 faces rates well above historic lows, even if cuts continue.
Savings
For savers:
- Falling rates reduce easy-access savings returns
- Fixed-term accounts may lock in higher yields for longer
Shopping around remains essential as banks do not always pass on rate changes evenly.
Pensions and annuities
Interest rates influence long-term bond yields, which underpin annuity pricing. While lower rates can reduce annuity income, stability matters more than short-term moves for retirement planning.
Step-by-step: how to assess where rates are heading
You don’t need complex models to track the direction of UK interest rates.
- Follow inflation data – particularly services inflation
- Watch wage growth figures
- Read Bank of England MPC statements
- Monitor mortgage pricing trends
- Track upcoming MPC meeting dates
Taken together, these indicators offer early signals of whether rates are more likely to rise or fall.
Pros and cons of UK interest rates rising again
Potential benefits
- Better control of inflation
- Higher returns for savers
- Reduced risk of asset bubbles
Potential drawbacks
- Higher mortgage and loan costs
- Slower economic growth
- Pressure on highly indebted households
This trade-off explains why the Bank of England moves cautiously.
UK-focused comparisons
Fixed vs variable mortgages
- Fixed rates offer certainty but may lag falling rates
- Variable rates can fall quickly, but expose borrowers to future rises
Borrowers vs savers
- Borrowers benefit from falling rates
- Savers benefit from higher rates
Policy changes inevitably help one group more than another.
Table: What different rate paths could mean for UK households
| Rate Direction | Likely Cause | Impact on Mortgages | Impact on Savings |
|---|---|---|---|
| Rates rise again | Inflation rebounds | Higher repayments | Improved returns |
| Rates hold | Inflation stabilises | Payments stabilise | Flat returns |
| Rates fall | Inflation cools | Borrowing relief | Lower savings income |
Useful Tips for UK Readers
- Stress-test your mortgage budget for potential future rises
- Lock in savings rates if you rely on interest income
- Start remortgage planning at least six months early
- Avoid assuming rates will return to historic lows
- Use official Bank of England updates, not headlines alone
FAQ: When Will UK Interest Rates Go Up?
When will UK interest rates go up again?
There is no confirmed date. Rates would only rise again if inflation or wage growth re-accelerates.
When will interest rates fall in the UK?
Gradual falls are possible if inflation continues to ease, but cuts are likely to be slow and limited.
When will interest rates drop in the UK?
A sharp drop would require a major economic slowdown, which is not currently the central forecast.
Will UK interest rates go down in 2025?
Rates may edge lower or remain stable in 2025, but a return to near-zero levels is unlikely.
Will interest rates keep falling in the UK long term?
Possibly, but only if inflation remains controlled and economic conditions weaken.
Should homeowners wait before fixing a mortgage?
This depends on risk tolerance. Fixed rates offer certainty, while variable rates may benefit if cuts continue.
Conclusion
So, when will UK interest rates go up? For now, there is no clear signal that rate rises are imminent. The Bank of England remains focused on inflation data, wage growth, and economic stability rather than committing to a fixed path.
For UK households, the key takeaway is preparation rather than prediction. Rates may fall further, stabilise, or rise again depending on how the economy evolves. Monitoring inflation, planning ahead for mortgages and savings, and avoiding assumptions about a return to ultra-low rates will be crucial in the months ahead.
Read our explainer on whether the UK is heading for a recession for more context on how growth risks can affect sterling and markets.
