Mortgage Repayments at Different Interest Rates: 3%, 4%, 5%, 6% and 7% Compared

What does a 1% higher mortgage rate actually cost?

The effect of an extra percentage point isn't a fixed £ amount — it depends on the outstanding balance, the mortgage term and the starting rate. On our £200,000, 25-year example, each extra point actually costs progressively more in cash terms:

• 3% → 4%: about +£107 a month
• 4% → 5%: about +£114 a month more
• 5% → 6%: about +£119 a month more
• 6% → 7%: about +£125 a month more

Moving from 3% to 4% is not the same £ change as moving from 6% to 7%, even though both are "1%" moves — the step gets a little more expensive each time. A larger balance or a shorter term would change these figures further, which is why it's worth calculating your own numbers rather than assuming a flat rule of thumb.

Why do higher interest rates increase mortgage repayments?

A repayment mortgage payment is made up of two parts: interest on the amount you still owe, and capital that actually reduces what you owe. When the interest rate is higher, more interest is charged on that outstanding balance each month — so the payment required to clear the mortgage within the same term has to be higher too.

In the earlier years of a repayment mortgage, a larger share of each payment typically goes toward interest rather than capital, simply because the outstanding balance — and therefore the interest charged on it — is at its highest early on. As the balance falls, more of each payment goes toward capital instead, even though the payment amount itself stays the same for the rest of a fixed-rate deal.

What if you're already on a fixed-rate mortgage?

With a fixed-rate mortgage, the rate you've agreed normally stays fixed for the length of that deal, so general market or Bank Rate movements don't usually change your payment while you're still within the fixed period.

Rate differences become particularly relevant when the fixed deal ends, when you move onto a new mortgage product, when you remortgage, or if you move onto your lender's standard variable rate (SVR). At that point, the rate available to you — whatever it happens to be — determines your new repayment, in much the same way the illustrative rates above determine repayments in this article.

This article can't tell you which mortgage product or rate is right for you — that depends on your own circumstances and is worth discussing with a mortgage adviser or your lender. For a general explanation of how mortgage interest rates work, MoneyHelper's guide on understanding mortgages and interest rates is a good starting point.

What about tracker and variable-rate mortgages?

A tracker mortgage's rate is set to follow a specified underlying rate — commonly the Bank of England's Bank Rate — plus a fixed margin set by the lender. A standard variable rate (SVR), by contrast, is a rate the lender sets itself and can change more or less at its own discretion, within its terms.

Because these rates can move, the monthly payment on a tracker or variable-rate mortgage can change whenever the applicable rate changes — unlike a fixed-rate mortgage, which is insulated from those movements until the fixed period ends. MoneyHelper explains this in more detail in how will interest rates affect my mortgage?, and the Bank of England's own explainer on what are interest rates? covers how Bank Rate itself works.

How does a £200,000 mortgage compare with the average UK house price?

The £200,000 figure used throughout this article isn't meant to represent a typical UK mortgage. It's a clean, round benchmark chosen because it makes it easy to see how the same mortgage behaves at different interest rates, without the extra variables that come with any one borrower's actual circumstances.

For real-world context, the average UK house price was £273,000 in July 2026, according to the UK House Price Index published by the Office for National Statistics. That figure is provisional and may later be revised, and it will change again in future releases — importantly, it describes the average price paid for a property, not the average mortgage.

A house price and a mortgage size aren't the same thing, because most buyers put down a deposit or bring existing equity, so the mortgage itself is usually smaller than the property's value. As a purely illustrative example — not a claim about typical UK buyers or deposits — a 10% deposit on a £273,000 property would be £27,300, leaving a mortgage of £245,700 at 90% loan-to-value.

Hypothetical example only, based on an assumed 10% deposit. Not a claim about the average UK deposit, loan-to-value or mortgage size.

Actual mortgage amounts vary widely depending on the property's price, the size of any deposit or equity, location and individual circumstances — there's no single "average" mortgage that applies to every buyer. The £200,000 figure used elsewhere in this article should be read as a comparison benchmark for illustrating interest-rate effects, not as a claim about the average UK mortgage.