<div id="readability-page-1"> <time datetime="2026-03-25T11:16:51+00:00"> Wednesday 25 March 2026 11:16 am </time> | Updated: <time datetime="2026-03-25T11:17:02+00:00"> Wednesday 25 March 2026 11:17 am </time> <div> Add as a preferred source on Google </div> <figure> <div> </div> <img width="742" height="495" src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2024/07/Banks-Fined-2bn-By-Regulators-For-Attempted-To-Manipulation-Foreign-Exchange-Rates-458843330.webp/query-dz03NDI?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2024/07/Banks-Fined-2bn-By-Regulators-For-Attempted-To-Manipulation-Foreign-Exchange-Rates-458843330.webp/query-dz03NDI"/> <figcaption>Lender's pulled their deals amid mortgage chaos.</figcaption> </figure> The UK mortgage market has been flipped upside down with Brits facing higher prices to borrow in the short-term as the Iran war rattles the economy.The average five-year fixed deal for a homeowner has spiked to 5.54 per cent this morning, up from 4.95 per cent at the start of March, according to financial information platform Moneyfacts.The level marks the highest for the five-year fix since September 2024.Meanwhile, the average two-year fix has leapfrogged its five-year counterpart, spiking to 5.56 per cent this morning, up from 4.83 per cent at the beginning of the month.Rachel Springall, finance expert at Moneyfacts, said: “There is hope this will be a temporary blip until the markets settle down, but it depends how long volatility prolongs. “This is unusual, however, its all down to how the markets foresee interest rate setting, many expect higher rates over the shorter-term.”Lenders use swap rates, which reflect market expectations of future central bank base rates, to price mortgages. Play Video <h2 id="h-mortgage-market-hit-by-changing-rate-cut-expectations">Mortgage market hit by changing rate cut expectations</h2>Over the last month, expectations for interest rate cuts have drastically changed with economists across the City flipping on expectations of a cut as the conflict in the Middle East broke out.The Bank of England voted unanimously to hold rates at 3.75 per cent this month, in a move that left the door open to further changes in either direction.The mortgage market has responded with jitters with lenders pulling around a fifth of available deals since the war began.Amidst the market chaos, nearly 500 homeowner mortgages have disappeared from the market in mere days – marking the fastest rate since the Liz Truss mini-budget in 2022.“The unrest in the Middle East is causing concerns over path of interest rate setting, with inflation expected to spike in the months ahead,” Springall said.“If deals come back within the coming days, they will likely be at inflated rates to catch up with the current state of play. After all, a volatile mortgage market tends to be a more expensive one.”She added brokers were “rushed off their feet trying to keep on top of the mortgage mayhem”.Nationwide and Halifax kicked off the week by driving up their rates.Britain’s biggest building society hiked its mortgage fixed and tracker rates by 0.3 per cent whilst Halifax slapped increases on all fixed-rate products across purchase, remortgage, and product transfer ranges.It follows the likes of Barclays, HSBC UK and a number of building societies – including Coventry Building Society, Yorkshire Building Society and Nottingham Building Society – who have all kicked rates up in light of the conflict. </div>

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The UK mortgage market is experiencing significant turmoil as average five-year fixed mortgage rates have surged to 5.54% from 4.95% since early March, driven by economic instability due to the Iran war. The average two-year fixed rate has also increased to 5.56%. Lenders have withdrawn about 20% of mortgage deals, with nearly 500 products disappearing in days. Experts suggest this volatility may lead to higher rates in the future, as inflation concerns grow amid the ongoing conflict.

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‘Mortgage mayhem’: Banks’ rates soar past 5.5 per cent amid Iran war volatility