UK mortgage rates rise to their highest level in a month, with renewed tension in the Middle East feeding through to borrowers and, by extension, to the landlords and portfolio investors weighing their next remortgage. Lenders’ funding costs have climbed as markets conclude that a prolonged conflict reduces the chance of interest rate cuts from central banks.
Five big banks lead the repricing
The five biggest High Street banks are among a host of lenders that have raised their interest rates on new fixed deals in recent days. HSBC has confirmed it will increase its mortgage rates on Monday.
Rachel Springall, finance expert at Moneyfacts, said 100 deals had been pulled temporarily as lenders reconsidered their pricing plans.
The reversal is abrupt. Rates had been falling as a ceasefire between the US and Iran initially appeared to hold, only for fresh strikes and Houthi militia attacks on oil tankers in the Red Sea to reignite fears over global energy supplies.
Oil prices hit $100 a barrel on Thursday for the first time since May, stoking concerns about higher inflation and a lower likelihood of rate cuts. That backdrop has already unsettled the wider market, with average UK house prices slipping below £300,000 amid mortgage rate uncertainty.
Where fixed rates stand now
More than eight in 10 mortgage customers hold fixed-rate deals, where the interest rate does not change until the product expires, usually after two or five years, and a new deal is chosen to replace it.
The average rate on a new two-year fixed deal is 5.59 per cent, according to Moneyfacts. Although it has risen consistently in recent days and is the highest since 19 June 2026, it remains below the Iran war peak of 5.9 per cent recorded in April.
The average five-year fixed rate is 5.61 per cent, a level last seen on 7 June 2026.
What rising rates mean for landlords
The direction of travel matters well beyond owner-occupiers. Recent projections from the Bank of England suggest just over five million homeowners should expect their monthly mortgage repayments to increase by the end of 2028, a reminder of how widely higher funding costs will be felt.
“It will be incredibly frustrating for borrowers to see rates rise back up to where they were a month ago,” said Springall. “The positive progress over recent weeks now feels all but lost, but what the market needs is a period of stability.”
She suggested that anyone needing to remortgage this year could lock in a new deal now with their existing lender ahead of time, but should also seek help from a broker to see whether better deals exist elsewhere.
“Brokers are an anchor during turbulent times as they can help borrowers keep abreast of changes and be there step by step when going through a mortgage application,” she said.
Brokers echo the caution. “Any borrower hoping for rate cuts to become an ongoing trend will need to rethink,” said David Hollingworth, of L&C Mortgages. “Momentum has performed an about turn and now clearly shifted to fixed rates rising in the near term at least.”
The investor takeaway
For portfolio investors, the message is to plan for volatility rather than bet on a smooth downward glide in rates.
Locking in early, stress-testing rental yields against higher finance costs and keeping a broker close all look prudent while the market lacks the stability it needs. That discipline matters more with rental growth forecast to cool in 2026, leaving less headroom to absorb a rising mortgage bill.
The opportunity has not closed, though. With returns still achievable in the right locations, investors who stay focused on the numbers, rather than chasing a headline rate that may not last, are best placed to weather the current uncertainty.
