The average two- and five-year fixed residential mortgage rates have surpassed 5% and nearly 500 products have been removed in the past two days as the market adjusts to continued volatility from the fallout from the US-Iran conflict.
According to Moneyfacts, the average two-year fixed rate stands at 5.01%, which is up from 4.84% on Friday. It is also the highest since 6 August last year, when the average two-year fixed rate was 5.01%.
The average five-year fixed rate is 5.09%, a rise from 4.96% on Friday. Moneyfacts noted that this is the highest level since 26 June 2025.
Moneyfacts added that in the last 48 hours, around 472 residential mortgage products have been withdrawn from the market, which is around 6.5% of the total residential mortgage market.
The total product count for residential mortgage currently stands at 7,164 deals.
The firm said it is the biggest decrease in mortgage product numbers since the mini Budget in 2022.
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At the time, around 935 products were withdrawn in a single deal, equal to around a quarter of the mortgage market.
Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: “Recent days have been some of the most turbulent in the UK mortgage market since the aftermath of the September 2022 mini Budget.
“In the last 48 hours, almost 500 residential mortgage products have been withdrawn as lenders reacted to rapidly rising swap rates. However, the scale is nowhere near the shock seen in late September 2022 when 935 products, which accounted for more than a quarter of the market at the time, disappeared in a single day.”
He added: “Many of these deals are likely to return within the next few days and weeks as lenders adjust their pricing to higher rate expectations. Moneyfacts average mortgage rates have also jumped considerably higher, with the typical two-year fixed rate now at 5.01% for the first time since August 2025 and the average five-year fix surging past 5% to reach 5.09%.
“It’s unwelcome news for borrowers, as the prospect of falling mortgage rates has quickly given way to rate rises. How far they could go is now heavily dependent on how global markets and inflation expectations evolve as conflict in the Middle East unfolds.”
Following military strikes from US and Israel on Iran, and subsequent retaliation, the price of oil has skyrocketed, leading to higher oil prices and expected rises in energy costs that could boost inflation.
This could lead to a revised base rate cut forecast with some suggestions of interest rate rises, which in turn impacts swap rates that dictate mortgage pricing.
Earlier this week, several lenders pulled products or increased their rates in response to market volatility.
