Mortgage rates in the UK have climbed this week as major lenders respond to warnings from the Bank of England about the potential impact of the US-Israel conflict on Iran. The Bank has indicated that the ongoing tensions could push up monthly mortgage costs for more than a million households, with energy price increases and global economic uncertainty adding to financial pressures.
According to Uswitch, the average two-year fixed mortgage now stands at 5.61%, up from 5.23% last week. Meanwhile, the typical five-year fixed deal has risen to 5.63%, compared with 5.32% previously. These figures are based on a 75% loan-to-value (LTV) mortgage, requiring buyers to have a 25% deposit.
Despite speculation that interest rates might fall to 3.5% earlier this year, the Bank of England has held the base rate at 3.75%, citing the economic fallout from the Middle East conflict. In its latest Financial Stability Report, the BoE warned that UK households and businesses are likely to face rising costs and greater financial strain, as energy prices and borrowing costs remain elevated.
The report also highlighted the drop in available mortgage products, which have fallen from 8,500 to 7,000 across the UK. Average rates for two-year fixed mortgages have increased by around 0.8 percentage points, while five-year fixes have seen a rise of 0.7 percentage points. If these trends continue, an estimated 5.2 million mortgage holders could face higher repayments by the final quarter of 2028, up from 3.9 million in previous projections.
HSBC has increased its two-year fixed rate to 5.17% for standard borrowers with a 60% LTV, up from 4.57%, while the five-year fix now stands at 5.18%, compared with 4.68% last week. Higher LTV deals, such as 95% mortgages, come with even higher rates, with a two-year fix at 5.99%. The bank has introduced a cashback incentive of up to £2,000 to help new buyers with upfront costs, aiming to make the housing market slightly more affordable amid rising rates.
NatWest’s two-year deal has risen to 4.47% from 4.04%, while its five-year fix is now 4.92%, up from 4.49%. Both require a 40% deposit. Barclays has kept its two-year rate at 4.60% and five-year rate at 4.80%, while also offering 95% LTV mortgages for new-build properties to ease entry into homeownership.
Nationwide has increased its two-year deal from 4.75% to 4.90%, with the five-year fixed rate now 5.15%. First-time buyers can claim £500 cashback when completing a mortgage, and the lender has expanded high loan-to-income lending to allow borrowers to access larger loans than previously possible.
Halifax’s two-year fixed rate has dropped slightly to 4.81%, but its five-year deal increased to 4.95%. Santander has withdrawn some lower-value first-time buyer products but continues to offer competitive rates for borrowers with deposits of 15% or higher, including a two-year fix at 4.82% and a five-year fix at 4.76%.
For buyers seeking the cheapest deals, NatWest offers the most competitive two-year fixed rate for first-time buyers at 4.47%, while Barclays has the lowest five-year rate at 4.80%. Both options, however, require a substantial 40% deposit. With average UK house prices at £277,186 in March 2026, buyers would need a deposit exceeding £110,000 to access these rates.
Meanwhile, some lenders are targeting first-time buyers with smaller deposits. Melton Building Society has launched a 100% LTV mortgage in the East Midlands, allowing buyers to cover the full property price, while Newcastle Building Society’s First Step mortgage offers a 2% deposit option. Skipton and Leeds Building Societies have also relaxed income and borrowing limits to support first-time buyers and those remortgaging.
Overall, the market reflects the ongoing impact of the BoE’s base rate adjustments, geopolitical uncertainty, and higher borrowing costs. While many mortgage holders hope for rate cuts, homeowners and prospective buyers are navigating a challenging landscape of rising repayments and reduced product availability.
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