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% due to turmoil in the home loan market caused by the ongoing conflict in the Middle East.
Recent Developments
On March 11, 2026, the average two-year fixed-rate mortgage hit 5.01%, while the typical rate on a five-year mortgage rose to 5.09%. In the past 48 hours alone, nearly 500 mortgage deals have been pulled, with 472 residential mortgage products withdrawn from the market, marking a significant shift in lending practices.
Impact on Borrowers
About 1.8 million fixed-rate deals are set to end in 2026, leaving many borrowers in need of securing new mortgages under these rising rates. 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 recent days have been some of the most turbulent in the UK mortgage market.
Future Expectations
The probability of a rate reduction this year has fallen to 20%, down from 50% just days prior on March 8, 2026. The base rate is expected to be held at 3.75% at the central bank’s meeting on March 19, 2026. French commented, “How far they could go is now heavily dependent on how global markets and inflation expectations evolve as conflict in the Middle East unfolds.”
Despite the current turmoil, some analysts believe that many of the withdrawn deals may return within the next few days and weeks as lenders adjust their pricing to higher rate expectations. However, details remain unconfirmed regarding the exact impact of the Middle East conflict on future mortgage rates.
