UK mortgage rates rise to highest level for a month

Image source, Getty ImagesByKevin PeacheyCost of living correspondentPublished4 hours agoUK average mortgage rates have risen back to the level of a month ago as renewed tensions in the Middle East feed through to homeowners.

Lenders' funding costs have increased as markets judge that a prolonged conflict reduces the possibility of interest rate cuts by central banks.

The five biggest High Street banks are among a host of lenders which have increased their interest rates on new fixed deals in recent days.

Recent projections by the Bank of England suggest just over five million homeowners should expect their monthly mortgage repayments to increase by the end of 2028.

Mortgage rates had been falling as a ceasefire between the US and Iran initially appeared to hold.

But fresh strikes and Houthi militia attacks on oil tankers in the Red Sea reignited fears over global energy supplies.

Oil prices hit $100 a barrel for the first time since May on Thursday after several days of increases, stoking fears of higher inflation and a lower likelihood of interest rate cuts.

The interest rate on this kind of mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it.

The average rate on a new two-year fixed deal is 5.58%, according to financial information service Moneyfacts. Although it has risen consistently in recent days, it remains below the Iran war peak in April of 5.9%.

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This calculator does not constitute financial advice. It is based on a standard mortgage repayment formula dependent on the mortgage size and length and a fixed interest rate. It should be used as a guide only and does not represent the suitability, eligibility or availability of mortgage offers for users. For exact figures, users will need to approach an official mortgage lender.