Mortgage Market Shaken as 689 Deals Withdrawn Amid Iran War Escalation
Banks and lenders have pulled almost 700 mortgage deals from the market as the conflict in the Middle East continues to escalate, according to data from Moneyfacts. This significant withdrawal has led to a sharp increase in fixed mortgage rates, leaving borrowers with fewer options and higher costs.
Drastic Reduction in Low-Rate Mortgages
Moneyfacts data reveals a dramatic decline in affordable mortgage products. On Tuesday morning, there were only nine fixed-rate deals available with rates below 4%, a stark drop from 490 such deals on March 9. Overall, the market saw 689 fewer mortgage products compared to just over a week ago, representing nearly a tenth of the total market.
Expert Insights on the Market Turmoil
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, commented on the situation. "Borrowers searching for the lowest fixed rates will be disappointed by the disappearance of sub-4% mortgages, but these rates are not sustainable given the rise in swap rates," she said. "Lenders carefully monitor their margins, so it would be unwise for them to price deals too low if interest rates are expected to increase, even in the short term."
Rising Costs for Homeowners
The average two-year fixed mortgage rate has jumped from 4.83% at the beginning of March to 5.28% today, marking its highest level since April 2025. Similarly, the average five-year fix has increased from 4.95% to 5.32%, reaching its peak since February 2025.
Adam French, head of consumer finance at Moneyfacts, highlighted the financial impact on borrowers. "For a homeowner with a £250,000 mortgage over 25 years, this means paying an additional £788 per year on a two-year fixed deal or £651 more on a five-year deal compared to just two weeks ago," he explained.
Market Volatility and Future Predictions
The withdrawal of mortgage products comes amid heightened geopolitical tensions, including Israel's announcement of strikes targeting Iran's security officials. French warned that "choice continues to fall as lenders pull deals and reprice in response to rapidly rising funding costs." He added that borrowers should prepare for further volatility in the coming weeks as the global economy anticipates potential economic shifts.
This development underscores the sensitivity of the mortgage market to international events, with lenders reacting swiftly to protect their margins amid uncertainty. Homebuyers and existing borrowers are advised to stay informed and consider locking in rates quickly if possible, as the landscape remains unpredictable.
