1,500 fewer mortgage deals on market ‘direct response to Middle East conflict’

Homeowners’ choice of mortgage deals has shrunk by nearly a fifth over the past couple of weeks, with nearly 1,500 fewer deals available, according to analysis from a financial information website.

Moneyfacts said that, as of Monday morning, there were 1,492 fewer residential mortgage products available compared with March 9, meaning the number of available products has shrunk by 19.5%.

Some 744 deals have disappeared since Thursday last week, Moneyfacts said.

On that day, the Bank of England base rate was held at 3.75%, but forecasts for UK inflation were also hiked.

Lenders have been scrambling to increase the mortgage rates they are offering and withdraw some products amid changing expectations for inflation, with the conflict in the Middle East putting pressure on prices.

Swap rates, which are used by lenders to price mortgages, have been rising in recent weeks.

Expectations that the Bank of England is set to cut the base rate this year have also gone into reverse, with some finance experts suggesting increases could be made amid the sharper rises in inflation than were previously expected.

The Bank of England’s Monetary Policy Committee now expects Consumer Prices Index (CPI) inflation to be around 3% in the second quarter of 2026, up from the 2.1% that had been forecast in February, with a potential rise in inflation up to 3.5% in the third quarter.

Moneyfacts said homeowners will find the the average two-year fixed-rate mortgage has risen from 4.83% at the start of March to 5.43% on Monday morning.

The average five-year fixed-rate deal on the market has risen from 4.95% at the start of March to 5.45%.

Adam French, head of consumer finance at Moneyfacts, said: “Rates continue to climb as lenders scramble to keep pace with rising funding costs.

“The average two-year fixed-rate has gone from 4.83% at the start of March to 5.43% today, its highest level since February 2025. The average five-year fix has gone from 4.95% to 5.45%, now at its highest since July 2024. Even the very cheapest deals have shifted significantly.”

He said: “The combination of rising rates and falling choice is a direct response to the conflict in the Middle East which has dramatically shifted expectations around inflation and interest rates. Many deals are likely to return to the market in the coming days and weeks but repriced at higher rates.

“While a quicker resolution to the conflict could ease some of the pressure on rates, the reality is that a more volatile world is a more expensive world.

“Even though the most competitive deals will remain below average, anyone looking to buy or remortgage this year needs to prepare for higher costs than previously expected.”

Despite the shrinking choice of mortgage deals for homeowners in recent weeks, the fall has not been as sharp as in the aftermath of the mini-budget in 2022.

The biggest single-day fall for residential mortgages recorded by Moneyfacts was the withdrawal of 935 products on September 27 2022, which it has said was a little over 25% of the deals available at the time.

Nicholas Mendes, mortgage technical manager at John Charcol, said: “There are understandable comparisons with the volatility seen after the Liz Truss mini-budget, because the pattern of rapid withdrawals and repricing feels familiar.

“But the cause is different. In 2022, the shock was driven by domestic fiscal credibility.

“This time, the pressure is coming from a sharp shift in rate expectations, higher swap pricing, and concern that policy may need to stay tighter for longer.

“That does not automatically mean a return to those peak mortgage rates, but it does raise the risk of further upward moves in the near-term.”

He said that speaking to a broker early could potentially help borrowers, adding that for those coming up to a remortgage: “In most cases, a new rate can be secured three to six months before an existing deal ends.

“If rates improve before completion, there is often scope to switch to something lower, meaning you save a significant amount over the term of the mortgage.”