Published by Global Banking & Finance Review®
Posted on March 24, 2026
2 min readLast updated: March 24, 2026
Add as preferred source on GoogleBritain's mortgage rates have surged—as seen since the pandemic and the 2022 mini‑budget crisis—driven by the Iran war’s impact on gilt and swap rates, prompting lenders to rapidly withdraw and reprice deals.
By Lawrence White
LONDON, March 24 (Reuters) - The Iran conflict is causing price turmoil in Britain's mortgage market not seen since the disruption of the pandemic and the country's 2022 mini-budget crisis, data from Moneyfacts shows, underlining how the war is playing havoc with financial markets worldwide.
Since the U.S. and Israel first struck Iran on February 28, Britain's borrowing costs have risen a stark 90 basis points (bps), to highs last seen in November 2023 when yields surged as the Bank of England hiked rates to combat inflation.
In the 24 days since the conflict began, the average two-year fixed rate mortgage has risen from 4.83% to 5.51% on March 24, the data from Moneyfacts showed, while five-year mortgages have risen 57 bps to 5.52%.
That compares with a 28bps fall in two-year pricing during the COVID era as the Bank of England slashed rates to help the economy, and a much sharper 180 bps increase during the 2022 mini-budget fiasco, as international bond investors savaged the British government's plan to cut taxes through more borrowing.
The current disruption reflects the fact that British banks do not wait for interest rates to rise before repricing home loans but instead respond to expected hikes by cutting products from the market, often overnight, brokers said.
Since the war in Iran began, a net 21% (1,780) of available residential mortgage products on the market have been withdrawn, Moneyfacts said. While that has not yet reached the 45% of products withdrawn seen during the COVID and mini-budget crises, brokers said banks will continue to reprice amid concern that the Bank of England's policy may now need to stay tighter for longer.
(Reporting by Lawrence White, additional reporting by Alun John; Editing by Hugh Lawson)
Since the Iran conflict began, UK mortgage rates have surged, with two-year fixed rates rising from 4.83% to 5.51% in just 24 days.
Increased borrowing costs and mortgage product withdrawals driven by expectations of tighter Bank of England policy amid the Iran conflict are causing the turmoil.
The disruption is similar to the pandemic and the 2022 mini-budget crisis, but not yet at the same severity of mortgage product withdrawals.
A net 21% of available residential mortgage products (1,780 products) have been withdrawn from the market since the Iran conflict began.
No, UK banks often reprice home loans in anticipation of rate hikes, frequently withdrawing products overnight.
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