UK mortgage rates rise as war on Iran uncertainty hits housing market

Synopsis

Rising mortgage rates in the United Kingdom are linked to the ongoing conflict in Iran, creating significant pressure on the housing market. As of June 2026, the average two-year fixed mortgage rate has increased from 4.83% in early March to 5.66%, while the five-year fixed-rate mortgage has risen from 4.95% to 5.62%. This escalation, coupled with economic uncertainty, has led to a 0.6% decline in house prices in May, marking the fastest monthly drop in nearly a year, with predictions of an overall 2% decrease in 2026.