The economy has a direct impact on mortgage rates. The Bank of England's base rate is a significant factor – when the economy is strong, the Bank of England may raise interest rates to keep inflation at their target rate, which could lead to higher mortgage rates. Conversely, during an economic downturn, the Bank may lower interest rates to stimulate the economy, potentially leading to lower mortgage rates. Additionally, other factors such as inflation, employment rates, and the state of the housing market can also impact mortgage rates.