Average UK mortgage rate rises to highest since August 2024; Next warns Iran war will push up costs – business live

## Summary
The average UK mortgage rate has now hit 5.50%, data from Moneyfacts shows. Adam French , head of consumer finance at Moneyfactscompare.co.uk , explains: double quotation mark “The Moneyfacts Average Mortgage Rate has hit 5.50% - heights last seen more than 18 months ago, marking another unwelcome milestone for borrowers this month. These rising costs are in direct response to the conflict in the Middle East which has dramatically shifted market expectations around inflation and future interest rates, with lenders scrambling to keep up with rising funding costs. “Moneyfacts’ analysis of more than 30 years of historic rates data shows mortgage rates have historically averaged around 1.5-1.75 percentage points above Base Rate. If a couple of rate rises materialise as markets are currently predicting, this could see the overall average mortgage rate stabilise at around 5.75%-6.00%.

## Article Content
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The UK’s cost of living squeeze is tightening by the day, as the Iran war sends inflationary pressures rippling through the global economy.
The average UK mortgage rate has now hit 5.50%, data from Moneyfacts shows. That’s the highest rate since August 2024, as lenders have scrambled to reprice mortgage products as hopes of UK interest rate cuts this year have faded.
This means the typical annual cost of borrowing £250,000 over 25 years has risen by more than £1,075 per year – anyone looking to buy or remortgage this year needs to prepare for substantially higher costs than previously expected.
Adam French
, head of consumer finance at
Moneyfactscompare.co.uk
, explains:
double quotation mark
“The Moneyfacts Average Mortgage Rate has hit 5.50% - heights last seen more than 18 months ago, marking another unwelcome milestone for borrowers this month. These rising costs are in direct response to the conflict in the Middle East which has dramatically shifted market expectations around inflation and future interest rates, with lenders scrambling to keep up with rising funding costs.
“Moneyfacts’ analysis of more than 30 years of historic rates data shows mortgage rates have historically averaged around 1.5-1.75 percentage points above Base Rate. If a couple of rate rises materialise as markets are currently predicting, this could see the overall average mortgage rate stabilise at around 5.75%-6.00%. This would leave borrowers paying £1,500-£2,000 more per year on a typical mortgage compared to just a few weeks ago. However, given the volatility of events this is subject to change in either direction.
Unusually yesterday, UK mortgage rates ‘inverted’. The average rate on two-year fixed rate mortgages overtook the equivalent five-year product – which would usually be more expensive.
Here’s the details:
Average 2-year fix rose from 4.83% at the start of March to 5.56%, the highest since September 2024.
Average 5-year fix rose from 4.95% at the start of March to 5.54%, the highest since January 2024.
The agenda
7am GMT: GFK’s Consumer Confidence survey for Germany
9.30am GMT: ONS: housing affordability in England and Wales in 2025
10am GMT: OECD Interim Economic Outlook Report
1.30pm GMT: US weekly jobless data

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## Expert Analysis

### Merits
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### Areas for Consideration
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### Implications
- These rising costs are in direct response to the conflict in the Middle East which has dramatically shifted market expectations around inflation and future interest rates, with lenders scrambling to keep up with rising funding costs. “Moneyfacts’ analysis of more than 30 years of historic rates data shows mortgage rates have historically averaged around 1.5-1.75 percentage points above Base Rate.
- If a couple of rate rises materialise as markets are currently predicting, this could see the overall average mortgage rate stabilise at around 5.75%-6.00%.
- However, given the volatility of events this is subject to change in either direction.

### Expert Commentary
This article covers rate, mortgage, average topics. Readability: Flesch-Kincaid grade 0.0. Word count: 374.