Interest rates are calculated according to the Base Rate set by the Bank of England and the London Inter-bank Offered Rate (LIBOR), and the lender's own charges. The interest rates the lenders set are also affected by prevailing market conditions, while taking into account the necessity of offering competitive rates.

The actual rate your lender will offer you is determined by your lender's rate and your financial situation, including your credit history. Compared to other types of loans, mortgages in general tend to have lower interest rates since your collateral in this case is your home.

APR (Annual Percentage Rate)
While lenders will advertise low interest rates to attract customers, these rates may not be available to you because this still depends on your own financial situation and the kind of mortgage you decide upon. The APR is the factor to consider when sifting through your choices for the best deal you can get. It is based on all the expenses and charges connected to your loan, from payment protection premiums to legal fees.
Keep in mind the APR when comparing your mortgage options. It will give you an idea to your loan's actual cost.