Mortgage rates are rising again due to the conflict in Iran and the fears that this could push up UK inflation
Mortgage deals are being pulled and rates are becoming more expensive(Image: fizkes via Getty Images)
Banks and lenders have pulled almost 700 mortgage deals as the Middle East war continues to escalate – with hardly any sub-4% rates remaining, according to Moneyfacts.
Mortgage rates are rising again due to the conflict in Iran and the fears that this could push up UK inflation, thereby potentially having a knock-on effect on interest rates.
The latest data from Moneyfacts shows there were just nine fixed-rate deals with rates below 4% on the market on Tuesday morning – down from 490 deals on March 9.
Across the mortgage market generally, there were 689 fewer products on the market on Tuesday morning, compared with March 9, according to Moneyfacts’ figures.
Banks and building societies have been increasing their mortgage rates and withdrawing products amid rises to swap rates, which are used by lenders to price mortgages.
The Bank of England is due to make its next base rate announcement on Thursday, but expectations of any potential cut have fallen.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “Borrowers looking for the lowest fixed rates will be disappointed to see the demise of sub-4% mortgages, but they are not sustainable with swap rates increasing.
“Lenders look at margins very carefully, so it would be unwise to price their deals too low, if the expectations are for interest rates to rise, even if over the short-term.”
Adam French, head of consumer finance at Moneyfacts, said some borrowers taking out a new deal could see hundreds of pounds more added to their annual mortgage bill, compared to at the start of March.
He said: “The average two-year fixed rate has jumped from 4.83% at the start of March to 5.28% today – its highest level since April 2025. The average five-year fix has risen from 4.95% to 5.32%, now at its highest since February 2025.
“For a borrower with a £250,000 mortgage over 25 years, that equates to paying £788 more per year on a two-year fix, or £651 more on a five-year deal compared to just a fortnight ago.
“Choice continues to fall as lenders pull deals and reprice in response to rapidly rising funding costs with 689 fewer mortgage products available since March 9 – almost a tenth of the market.
“Borrowers may need to brace for further volatility in the weeks ahead as the global economy braces for a ‘Trumpflation’ wave.”
How to find the cheapest mortgage rates
If your current mortgage is expiring, you should gather all the relevant information about your existing deal – such as the rate you are on and your loan to value (LTV).
This is the amount you are borrowing compared to the property’s value. Mortgage rates are often cheaper, when your LTV is lower, as you are borrowing less.
Once you have all your mortgage details, you should start looking at what other deals are out there.
You can normally do this by using online comparison tools, or by speaking to a mortgage broker, as they will often have access to deals that aren’t available on the open market.
You should also speak to your current lender to see what rates it can offer you. This is known as a product transfers, which is where you get a new deal from the same lender.
Once you’ve got a good idea of what rates you may be able to apply for, you will need to decide whether you want to fix – and if so, for how long – or whether you want to opt for a tracker or variable mortgage.
You can typically lock in a new mortgage deal up three to six months before your current deal ends. If you are thinking of leaving your current deal early, check if any early repayment charges apply.
