Current Situation
The upheaval in the mortgage market is the biggest since the aftermath of the 2022 mini-budget. Average mortgage rates in the UK have surpassed 5%, driven by turmoil in the home loan market linked to the ongoing conflict in the Middle East.
As of March 11, 2026, the average two-year fixed-rate mortgage has reached 5.01%, while the typical rate on a five-year mortgage is now 5.09%. This rapid increase has led to nearly 500 mortgage deals being pulled in just 48 hours, marking a significant shift in the lending landscape.
In total, 472 residential mortgage products were withdrawn from the market during this period. The swift actions by lenders reflect the heightened uncertainty surrounding future interest rates, with the probability of a rate reduction this year dropping to 20% from 50% just days prior.
Adam French, a housing expert, noted, “It’s unwelcome news for borrowers, as the prospect of falling mortgage rates has quickly given way to rate rises.” He further emphasized that the extent of future rate changes will depend heavily on global market conditions and inflation expectations as the conflict evolves.
Looking Ahead
Approximately 1.8 million fixed-rate deals are set to expire in 2026, necessitating that many borrowers secure new mortgages under these challenging conditions. Observers expect that many of the withdrawn deals may return in the coming days and weeks as lenders recalibrate their pricing strategies in response to the new rate expectations.
Details remain unconfirmed regarding the exact impact of the Middle East conflict on future mortgage rates, but the current situation underscores the volatility in the market. The base rate is anticipated to be held at 3.75% during the central bank’s meeting on March 19, 2026, which may provide some stability in the short term.
As the situation develops, stakeholders in the mortgage market will be closely monitoring both domestic and international factors that could influence lending rates and borrower options in the near future.