Mortgage Rates Rise As Middle East War Fuels Inflation
Mortgage Rates Rise As Middle East War Fuels Inflation
Updated Apr 17, 2026
Landlords who were expecting to secure a lower mortgage rate should be ready to pay more, as prolonged uncertainty over the US-Iran War threatens the world economy.
Rising energy prices worldwide, plugged into tensions in the Middle East, are likely to push up inflation in the UK and elsewhere.
This may mean ratesetters at the Bank of England will play safe and leave interest rates at the current 3.75 percent for longer, or even raise the rate a little to calm rising prices.
Money markets, especially those trading in government bonds and oil, have already reacted by cutting rates and boosting the price of a barrel of Brent crude from $73 a couple of weeks ago to $103 today (16 March 2026).
Mortgage data monitor Moneyfacts reports the average 2-year fixed residential mortgage rate has nudged up to 5.20% today, from 5.10% three days ago. Rates were 4.84% before the US-Israeli coalition struck Iran.
The average 5-year fixed residential mortgage rate is 5.25 percent, up from 5.19 percent.
The rates reflect that the Bank of England is unlikely to lower rates again this year.
Best buy-to-let mortgage rates
Product
No of deals
Best deal
2 year fixed rate
1575
2.34% - Zephyr Homeloans
3 year fixed rate
90
3.34% - BM Solutions
5 year fixed rate
1758
3.74% The Mortgage Works
Best loan-to-value deals
60%
3701
2.34% fixed for 2 years - Zephyr Homeloans
75%
2470
2.39% fixed for 2 years - Zephyr Homeloans
85%
499
2.89% fixed for 2 years - Molo Finance
Best variable rates
Discounted variable
116
2.90% for 2 years - Stafford Building Society
All variable rates
146
2.90% for 2 years - Stafford Building Society
Best corporate deal
10
3.89% fixed for 2 years - Molo Finance
Best first-time landlord deal
10
4.09% fixed until May 2031- HSBC
All buy-to-let best deal
2.34% fixed for 2 years - Zephyr Homeloans
Source: Moneyfacts
An example mortgage is borrowing £170,000 over 25 years on a house valued at £284,000 at an interest rate of 4.58 percent variable for 25 months, reverting to 8.49 percent variable for the term. 25 monthly payments of £648.83 and 275 monthly payments of £1202.75. Total payable £518,201.00 includes loan amount, interest of £346,977, a zero valuation fee and product fees of £999. The overall cost for comparison is 8.2 percent APRC representative.
