Suppose interest rates in the UK stay higher for longer than in similar countries. In that case, people who lend money earn more, and ordinary households tend to feel the squeeze through higher mortgage payments, higher rents, and little improvement in day-to-day living standards.
The OBR’s November 2025 forecast does not say this is anyone’s deliberate plan. However, it does add clear new details, showing two key points: the UK is likely to rely more on foreign funding to finance government borrowing, and families may be stuck with expensive borrowing costs for years.
A lot of the best post-budget analysis this year makes the same basic point: don’t get distracted by various small budget ‘announcements’.
Look at the OBR’s charts and assumptions about where the economy is heading, because that is where the real story lies. On that basis, the OBR’s 2025 forecast strengthens the case that Britain is settling into a ‘high-rate normal’, with winners and losers.
A growing problem: government borrowing stays expensive
The OBR says markets expect the Bank of England’s base rate to dip a bit in the short term. But, the more worrying figure is the cost of government borrowing in the long run.
In its November 2025 assumptions, the OBR says the interest rate on a typical 10-year government bond (“gilts”) is about 4.8%, and markets expect this to rise to 5.8% by 2030, which the OBR notes would be the highest level since 2000.
In plain English: even if official rates fall for a while, the country may still be paying very high rates to borrow money for years ahead.
The OBR also makes a striking international comparison: it says UK government bond yields are now “the highest in the G7”, and that UK borrowing costs have risen more than in comparable countries since 2021.
Who lends to the UK is changing — and that matters
The OBR also highlights a shift that rarely cuts through in everyday politics: who is buying UK government debt.
It says there has been a “significant fall” in demand from UK-based buyers. For example, the shrinkage of traditional pension schemes and the Bank of England no longer buying bonds, as it is instead selling them back into the market. As a result, the OBR says, the UK is becoming more reliant on overseas buyers, and it describes them as more price-sensitive.
That doesn’t prove anyone is trying to “please foreign investors”. But it does mean the UK depends more on the decisions of global investors, and those investors usually want a higher return if they think risks are rising.
Households: mortgage rates stay high for longer
The most politically sensitive part of the forecast is what it implies for household borrowing.
Last year’s October 2024 OBR forecast expected average mortgage rates (across existing mortgages) to rise from about 3.7% in 2024 to around 4.5% and then stay there.
This year’s November 2025 forecast is worse. It still starts around 3.7% in 2024, but it now expects average mortgage rates to rise to around 5% in 2029. The OBR also notes that mortgages reprice slowly because the UK mostly uses fixed-rate deals, so the effect of higher rates drags on.
So, even if people hear “interest rates are coming down”, many families may not feel much relief, because mortgage costs can stay high longer than headlines suggest.
The government’s interest bill stays huge
High interest rates don’t just hit mortgages; they also hit the public finances.
The OBR forecasts government debt interest rising from £114 billion in 2025–26 to £140 billion by 2030–31, and notes this is among the highest levels seen since the 1980s.
This is why focusing only on small budget measures can be misleading: in a £1.2 trillion state, relatively modest tax and spending changes can be outweighed by changes in the cost of borrowing.
The UK still depends heavily on the rest of the world
Finally, the OBR expects the UK to keep buying more from abroad than it sells, meaning the UK will continue to need money flowing in from outside.
It forecasts a widening current account deficit (from 2.2% of GDP in 2024, to around 3.5% on average from 2025 onwards). It also expects a growing “investment income” gap, meaning more money flowing out of the UK to investors, as UK interest rates remain higher than global rates.
Put simply, the UK may continue to require external funding, and the longer UK interest rates remain relatively high, the stronger the pull for overseas money seeking better returns.
What this update changes — and what it confirms
The OBR does not say, “We are keeping rates high to attract foreign money.” That claim is a political judgement, not an OBR statement.
But, the OBR’s November 2025 forecast adds more of the building blocks that make the broader argument credible: higher long-term borrowing costs, greater reliance on overseas buyers of UK debt, rising mortgage rates towards 5% late in the decade, a huge debt-interest bill, and continued dependence on foreign funding.
To be direct: if Britain is positioning itself as a high-return destination for global money, the OBR’s latest figures suggest ordinary households are still being asked to bear the cost.
