Will mortgage rates in the UK return to pre-Iran war levels? Brokers are divided on the issue. On June 17, 2026, the United States and Iran signed a historic Memorandum of Understanding (MoU) in Islamabad to end the military conflict. The conflict in the Middle East caused mortgage rates in the UK to jump, and even though the situation is winding down, the rates have remained elevated.
Will mortgage rates in the UK return to pre-Iran war levels?
The short answer is yes, but it will be a gradual descent rather than a sudden drop. The outbreak of the conflict in the Middle East earlier this year sent shockwaves through the financial markets, causing a sharp spike in oil prices, UK inflation expectations, and ultimately mortgage rates. However, with the recent US-Iran peace deal signed in June 2026, the economic outlook is starting to shift.
When will mortgage rates in the UK return to pre-Iran war levels?
One mortgage broker said sub-4% rates could be back in 3-4 months, while others believe the delayed inflationary impact of higher oil prices, two Monetary Policy Committee (MPC) members voting for a 0.25% hike this week, and political uncertainty caused by a possible Labour leadership battle could mean people have to wait far longer.
Speaking to Newspage, Doug Miller, Director at Bath-based Lansdown Financial Services, said there is "cautious optimism within the broker market" at present. He continued: "With the peace deal now signed, a number of high street lenders have already begun reducing mortgage rates. While rates remain above levels seen at the start of the year, they have eased from recent highs recorded only a few months ago. As swap rates continue to fall, there is scope — and increasingly an expectation — for further reductions from lenders in the weeks ahead. However, when or whether rates will return to pre-war levels remains highly uncertain. Borrowers should be cautious about assuming a swift return to those levels when making decisions around purchasing or remortgaging. No one can predict the future with certainty, even in more stable market conditions, but current indicators do point to improving sentiment and cautious optimism."
However, Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, is less convinced. He said: "If you’re waiting for mortgage rates to slide back to their pre-conflict glory days just because a Middle East peace plan was muttered, you might want to settle in. My advice is don't hold your breath. The ink isn’t dry on that agreement yet."
