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%, largely 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 hit 5.01%, while the typical rate on a five-year mortgage is now 5.09%. This marks a significant increase in borrowing costs for homeowners and prospective buyers alike.
In response to the changing economic landscape, nearly 500 mortgage deals have been pulled in the past 48 hours, with 472 residential mortgage products withdrawn from the market. This rapid withdrawal is indicative of the uncertainty lenders face in adjusting to higher rate expectations.
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 added that the prospect of falling mortgage rates has quickly given way to rate rises, which is unwelcome news for borrowers.
Looking ahead, about 1.8 million fixed-rate deals are set to end in 2026, requiring most borrowers to secure new mortgages under these elevated rates. The probability of a rate reduction this year has fallen to 20%, down from 50% just days earlier on March 8, 2026.
French also mentioned that many of the withdrawn deals are likely to return within the next few days and weeks as lenders adjust their pricing strategies. However, he cautioned that how far rates could go is now heavily dependent on how global markets and inflation expectations evolve as the 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 in a state of uncertainty.
Central Bank Meeting
The base rate is expected to be held at 3.75% at the central bank’s meeting on March 19, 2026, which may provide some stability in the market. However, the overall outlook remains precarious as the situation develops.
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