UK Mortgage Rates Hit Two-Year High Amid Conflict-Driven Economic Strains

Mortgage rates have reached two-year highs as the ongoing conflict in the Middle East continues to affect the domestic economy.

The average two-year fixed mortgage rate has risen to its highest since July 2024, according to Moneyfacts, a financial data site. The average five-year home loan rate has also reached its highest since October 2023.

Several major lenders have withdrawn their best rates below 5%, with Barclays pulling its 4.75% two-year fixed rate and its 4.93% five-year deal for new customers this week, leaving its best rates above 5%. Nationwide, Virgin Money, and TSB also announced rate increases.

Bank of England Governor Andrew Bailey has warned that the Bank Rate may need to rise from 3.75% to combat inflation, which is running at 3.1%. The next decision on interest rates will be made by the Monetary Policy Committee on November 5th.