“Trumpflation”—the specific brand of inflation tied to current U.S. foreign and military policy—is now the primary driver of UK mortgage rates. In just 14 days, the average annual cost of a new mortgage has risen by nearly £800, as lenders pull 700 products and raise rates in response to the war in Iran. This sudden shift has cast a shadow over the UK property market.
Adam French, head of consumer finance at Moneyfacts, explains that the average two-year fixed rate has jumped from 4.83% to 5.28% since the start of the month. This means a borrower with a £250,000 mortgage will pay roughly £788 more per year. The five-year fix has seen a similar rise to 5.32%, its highest level since early 2025.
The cause of this “upward march” is the uncertainty in global energy markets. As the conflict in the Middle East stokes oil and gas prices, the cost of funding for banks—measured by swap rates—has increased. Lenders have responded by withdrawing competitive products, including nearly 500 deals that were priced below 4% interest.
The Bank of England’s upcoming meeting on Thursday is now a “hold” rather than a “cut” event. The central bank is widely expected to keep rates at 3.75%, a major disappointment for those who were expecting relief. For the 1.8 million people whose current mortgage deals end in 2026, the situation represents a significant and unexpected financial challenge.
As the global economy continues to process the impact of the war, further volatility in mortgage rates is expected. The “Trumpflation” wave is proving to be a powerful force, reversing the downward trend in borrowing costs that many had hoped would define the 2026 housing market. Borrowers are encouraged to remain vigilant as the situation evolves.