Finance
UK Home Buyers Baulk as Iran War Pushes up Mortgage Rates, Rics Survey Shows
Published by Global Banking & Finance Review®
Posted on April 8, 2026
2 min readLast updated: April 8, 2026
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Britain’s housing market cooled in March as Iran war-driven surge in mortgage and swap rates undermined buyer confidence, with house-price expectations and buyer demand plunging to depths not seen since late 2023, per RICS.
UK Home Buyers Stall as Iran War Drives Mortgage Rates Higher, Says RICS
Impact of Iran War on UK Housing Market and Mortgage Rates
By Andy Bruce
Market Cooling and Buyer Sentiment
April 9 (Reuters) - Britain's housing market cooled noticeably last month as economic uncertainty stemming from the Iran war unnerved buyers who face rising mortgage rates, a survey from the Royal Institution of Chartered Surveyors showed on Thursday.
RICS' monthly net balances of new buyer demand, sales expectations and house prices all softened markedly in March, with the last falling to -23 from February's downwardly revised figure of -14.
House Price Trends and Recent Data
That represented the broadest fall in prices since January 2024 and followed data on Wednesday from mortgage lender Halifax which showed an unexpectedly sharp drop in its measure of house prices last month.
RICS' net balance of price expectations for the next three months fell to -43 from -19, marking the lowest reading since August 2023. New buyer demand also fell by the most since then.
Expert Commentary from RICS
"What had been a cautiously improving picture for activity has been knocked off course by the wider macro fallout from the Middle East conflict, as the renewed deterioration in the mortgage rate outlook has proved particularly challenging," said Tarrant Parsons, RICS' head of research and market analysis.
Mortgage Rate Volatility and Economic Uncertainty
Wednesday's news of a two-week ceasefire between the United States and Iran sparked a sharp fall in swap market rates that underpin Britain's mortgage market.
However, they remain markedly higher than their levels of late February, before the start of the conflict.
Parsons said it was unsurprising that buyer demand had softened in the face of the increase in mortgage rates.
Future Outlook and Geopolitical Risks
"The path ahead hinges on whether or not recent surges in oil and energy costs begin to reverse in what remains a highly uncertain geopolitical environment," he added.
Rental Market Developments
Rents continued to increase widely, however, with a balance of +25, reflecting a drop in new landlord instructions of -25 and rising demand for housing. New protections for tenants against eviction and rent rises take effect next month.
(Reporting by Andy Bruce; editing by David Milliken)
Key Takeaways
- •RICS survey for March shows sharp declines: house‑price balance fell to –23 (from –14), and three‑month price expectations dropped to –43, lowest since August 2023.
- •Mortgage costs rose sharply as two‑year fixed rates climbed from ~4.8% to over 5.5%, and lenders withdrew hundreds of deals amid swap‑rate volatility tied to Iran war.
- •Energy‑market turmoil and geopolitical uncertainty—notably oil price spikes via Strait of Hormuz—have clouded outlook, prompting borrowers and policymakers to brace for protracted pressure.
Frequently Asked Questions about UK home buyers baulk as Iran war pushes up mortgage rates, RICS survey shows
1How has the Iran war affected UK mortgage rates?
The Iran war increased uncertainty and pushed up UK mortgage rates, making home buying less attractive and cooling the housing market.
2What did the latest RICS survey reveal about UK house prices?
The RICS survey found house prices in the UK fell sharply in March, with net balances at the lowest since January 2024.
3What is the outlook for UK buyer demand according to RICS?
Buyer demand has softened significantly due to higher mortgage rates and economic uncertainty linked to the conflict in Iran.
4Are UK rents also affected by the current market conditions?
Rents continue to increase as new landlord instructions drop and tenant demand rises amidst market uncertainty.
5What could influence the future path of the UK housing market?
Future market direction will depend on whether oil and energy costs stabilize and geopolitical uncertainties ease.
