See more This is Money on Google - save us as a Preferred SourceBy HELEN CRANE, DEPUTY EDITOR, THIS IS MONEY Updated: 13:12 BST, 7 September 2026
A raft of mortgage lenders have hiked their rates today in response to escalation of the conflict in Iran and resulting chaos on the bond markets. Barclays, Santander, Skipton, TSB and the Nottingham Building Society have all announced that they are increasing interest rates on their fixed mortgages, many in the region of 0.15 percentage points. Coventry Building Society was first out of the blocks last week, announcing rate increases on its entire range of fixed-rate mortgages on Friday. Others including NatWest and HSBC put up rates earlier this month, and it is anticipated that rates could rise further in the coming days and weeks. Fears interest rates may need to rise, due to inflation triggered by a flare-up in the conflict between the US and Iran in the Middle East have been behind a bout of global bond-market turmoil.The yield on 30-year bonds, known as gilts, hit its highest level since 1998 in the middle of last week, hitting 5.94 per cent, while ten-year gilts reached 5.26 per cent, the highest level since the financial crisis in 2008. This increased expectations that the Bank of England will raise interest rates, which feeds through to investors demanding a higher yield to buy bonds.This has driven up mortgage rates because higher gilt yields increase the cost of borrowing for banks, and they pass this on to their customers. Mortgage pressure: Rates have increased in recent days on the back of bond market turmoilToday, the average two-year fixed mortgage rate is 5.63 per cent, up from 5.6 per cent on Friday according to rates scrutineer Moneyfacts. The average five-year rate is 5.68 per cent, up from 5.64 per cent on Friday.A 0.25 percentage point rise on a typical two-year fixed rate mortgage would add around £38 to monthly mortgage repayments, or £456 per year, based on a rate of 5.63 per cent, rising to 5.88 per cent. This assumes the household is borrowing £250,000 over 25 years. The cheapest rates available for those with the biggest deposits or equity are in the region of 4.5 per cent. Rachel Springall of Moneyfacts said: 'Borrowers expecting mortgage rates to drop in the coming weeks have had their hopes dashed. 'The prolonged conflict increases the chances for the Monetary Policy Committee to vote for an increase to the Bank of England Base Rate. 'However, this might not happen until November, according to economists. 'Regardless of any changes to the base rate, it is still essential borrowers do not delay seeking advice to navigate the mortgage maze.'Nicholas Mendes, mortgage technical manager at John Charcol advised homeowners who needed to remortgage in the next six months to secure a deal as soon as possible. It is usually possible to do this up to six months in advance of your current rate ending, and to swap to a different rate if things improve. Mendes said: 'Having a deal in place gives protection if pricing moves further against you, and if rates improve before completion there is often still the opportunity to review the product again.'There are also concerns mortgage rate rises could slow the lagging property market even further. House prices have recorded their first annual fall since 2023, according to the latest figures from Lloyds, going down by 0.4 per cent. Justin Moy, managing director at broker EHF Mortgages, said: 'Higher mortgage rates will always slow the property market, especially when certain sectors and locations in the UK are already struggling.'How to find a new mortgage Mortgage rates have jumped as conflict with Iran has driven up inflation expectations and dashed hopes of interest rate cuts.If you need a mortgage because you are buying a home, or your current fixed rate deal is due to end, you should explore your options as soon as possible. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with expert mortgage advice.Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.Or use L&C’s online Mortgage Finder to search thousands of deals from more than 90 different lenders to discover the best deal for you.Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage
