Average mortgage rates in the UK have surged past 5%, marking the most significant upheaval since the aftermath of the 2022 mini-budget. Nearly 500 mortgage products have been withdrawn in the past 48 hours as lenders scramble to respond to rising swap rates triggered by the Middle East conflict.
Major lenders including HSBC, Nationwide, Halifax, and Barclays have pushed through rate rises. HSBC announced a second round of price increases effective Thursday across a wide range of products. The average two-year fixed-rate mortgage hit 5.01% on Wednesday, up from 4.84% before the US-Israeli war on Iran, while the typical five-year rate stands at 5.09%.
Adam French, head of consumer finance at Moneyfacts, described the recent days as “some of the most turbulent in the UK mortgage market since the September 2022 mini-budget.” However, he noted that the scale of product withdrawals is “nowhere near the shock seen in late September 2022 when 935 products disappeared in a single day.”
The rising costs are a blow to buyers and those remortgaging, with about 1.8 million fixed-rate deals due to end in 2026. The conflict has disrupted expectations of interest rate cuts; economists now expect the Bank of England to hold the base rate at 3.75% at its March 19 meeting, with the probability of a cut this year falling to 20% from 50% on Tuesday.
French warned that future rate movements depend heavily on how global markets and inflation expectations evolve as the Middle East conflict unfolds.
