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 now surpassed 5%, primarily due to turmoil in the home loan market caused by 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 stands at 5.09%. This rapid increase in rates has led to significant changes in the market dynamics.
In the past 48 hours alone, nearly 500 mortgage deals have been pulled, marking a dramatic shift in the lending landscape. Specifically, 472 residential mortgage products were withdrawn, highlighting the urgency with which lenders are responding to the evolving situation.
Adam French, a mortgage expert, noted, “Recent days have been some of the most turbulent in the UK mortgage market since the aftermath of the September 2022 mini-budget.” He further stated, “It’s unwelcome news for borrowers, as the prospect of falling mortgage rates has quickly given way to rate rises.”
Looking ahead, about 1.8 million fixed-rate deals are set to end in 2026, necessitating that many borrowers secure new mortgages under these heightened rate conditions. The probability of a rate reduction this year has significantly decreased to 20%, down from 50% just days prior on March 8, 2026.
French added that many of the withdrawn deals are likely to return within the next few days and weeks as lenders adjust their pricing to align with higher rate expectations. However, he cautioned that “how far they could go is now heavily dependent on how global markets and inflation expectations evolve as conflict in the Middle East unfolds.”
Details remain unconfirmed regarding the exact impact of the Middle East conflict on future mortgage rates, leaving borrowers and lenders alike in a state of uncertainty.
The base rate is expected to be held at 3.75% at the central bank’s meeting on March 19, 2026, which may influence future lending practices and mortgage offerings.
