Welcome to our latest market update
This month, we announce a new office in Aberdeen, and debate thh impact of the Iran conflict on the market…
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The UK mortgage market in is in a much healthier place than it has been for a while, but recent events in the Middle East mean we’re not out of the woods yet.
Rates are lower than the peaks we saw in 2023–24, activity is picking up, and there’s more choice for borrowers – but the Iran conflict is adding a fresh layer of uncertainty around inflation and future interest rate cuts.
The Bank of England has kept the base rate at 3.75% following its meeting last month, pressing pause on earlier hints of rate cuts as it assesses the impact of higher energy prices on inflation.
In its latest update, the Bank highlighted that conflict in the Middle East has driven up global energy and commodity costs, warning that inflation is likely to be higher in the near term as a result. In plain terms, that makes the Bank more cautious about cutting rates too quickly.
For borrowers, the picture is still noticeably better than a year or two ago. Many lenders are pricing 2‑year fixed rates in the mid‑4% range, with 5‑year fixes broadly in the low‑ to mid‑4s depending on your deposit and overall circumstances. We’ve also seen some lenders pause planned reductions or edge rates up slightly as financial markets react to the changing inflation outlook, which is why rates have felt a bit more “jumpy” again in recent weeks.
After a quieter spell, there are clear signs that confidence is returning. Industry forecasts suggest modest growth in total mortgage lending this year, with a particular pick‑up expected in remortgaging as more people come to the end of fixed rates and look for a new deal. There is still some pressure on households who fixed at very low rates a few years ago and are now facing higher payments, which is reflected in a small expected rise in possessions even as arrears are projected to edge down.
That said, many commentators are more optimistic than they were 12 months ago. Some major lenders are talking about “modest” house price growth through 2026 as rates stabilise, while others have gone so far as to say the “stage is set” for a stronger mortgage market thanks to lower rates and a wider range of products.
At the same time, they stress that anyone coming off a very low fixed rate could still see a jump in their monthly payments, so tailored advice remains important.
The renewed conflict involving Iran, the US and Israel is the key global risk hanging over this recovery.
Oil prices have climbed sharply as markets react to the risk of disruption in and around the Strait of Hormuz, and gas prices have also moved higher. Some analysts estimate that a sizeable chunk of the current oil price is now a “risk premium” linked directly to the conflict.
For UK homeowners and buyers, the link is indirect but important. Higher energy and shipping costs tend to push inflation up, which in turn can make the Bank of England more hesitant about cutting interest rates. They also feed through into the government bond and swap markets that lenders use to price fixed‑rate mortgages.
If the conflict is short‑lived and prices settle back, we could see mortgage rates resume a gradual downward trend. If it drags on or escalates, there may be further upward pressure on borrowing costs and a slower recovery in housing market activity.
In this environment, a lot of people are weighing flexibility against certainty. Shorter‑term fixes, such as 2‑year deals, can feel attractive if you believe rates will fall further in the next couple of years. Longer‑term fixes, such as 5‑year products, can offer peace of mind if you’d rather lock in a rate that, while not as low as the ultra‑cheap deals of the past, is still competitive by historical standards.
As a rule of thumb, if you’re most concerned about keeping your monthly payments as predictable as possible, a longer‑term fix may suit you. If you’re comfortable with a bit more uncertainty in exchange for the possibility of benefiting from future rate cuts, a shorter‑term fix could be worth a discussion.
An adviser can help you look at your income, outgoings and future plans to find the balance that feels right for you.
We are here to help – please just let us know if you have any questions!
Below we have listed the lowest rates available across a range of LTVs.
Please note these are for illustration purposes only – not all clients may qualify for these. If you need any additional detail, please let us know,
| 95% | 90% | 85% | 80% |
|---|---|---|---|
|
5.35% - Barclays
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5.15% - Barclays
|
5.00% - Barclays
|
4.87% - Barclays
|
| 75% | 70% | 65% | 60% |
|---|---|---|---|
|
4.81% - Barclays
|
4.81% - Barclays
|
4.81% - Barclays
|
4.80% - Barclays
|
| 95% | 90% | 85% | 80% |
|---|---|---|---|
|
5.08% - Danske
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4.70% - Danske
|
4.95% - Barclays
|
4.91% - Barclays
|
| 75% | 70% | 65% | 60% |
|---|---|---|---|
|
4.90% - Barclays
|
4.90% - Barclays
|
4.90% - Barclays
|
4.88% - Barclays
|
Lenders last month approved the most mortgages in three months and consumer credit grew at the fastest pace in nearly two years, data showed, ahead of a potential hit from higher borrowing costs.
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We had a great experience with Amanda and Jamie at Mortgage Advice Bureau. They were both so helpful and supportive throughout our mortgage journey.
They worked around our busy schedules, kept us updated every step of the way, and made the whole process stress free.
We can’t recommend them enough – thank you so much for all your help in us buying our first home!
– Lucy K
Mortgage Advice Bureau has announced that the value of arranged mortgages reached £32 billion in 2025, a 23% increase on the previous year and a record level of lending for the business.
Alongside the rise in completed mortgage lending, the intermediary also recorded 10% growth in adviser numbers during 2025, which it says reflects strong recruitment momentum and continued demand from advisers looking to join its market-leading model.
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