Mortgage Costs Rise Amid Iran Conflict
A typical mortgage taken out currently is £788 a year more expensive than before the Iran war began, according to new data.
This increase pertains to homeowners and buyers with a 25-year mortgage of £250,000, based on an average two-year fixed rate of 5.28%.
The data, compiled by financial information service Moneyfacts, illustrates how lenders have raised rates and withdrawn deals since the US-Israel strikes on Iran commenced at the end of February.
The largest lenders have removed the best sub-4% mortgage deals, but brokers advise that borrowers can still manage the significant uncertainty by planning well ahead before any current deal expires.
Fixed and Variable Mortgage Rates Explained
For borrowers, the interest rate on a fixed mortgage remains unchanged until the deal expires, typically after two or five years, at which point a new deal is selected.
Variable deals, such as tracker rates, generally fluctuate in line with changes to the Bank of England's benchmark interest rate. The Bank's rate-setting committee is scheduled to meet later this week.
Recent Rate Increases
Moneyfacts data indicates that the average two-year fixed rate has risen from 4.83% at the start of March to 5.28% currently, marking its highest level since last April.
For those seeking a five-year deal, the average rate has increased from 4.95% to 5.32% over the same period, reaching its highest point since February of the previous year.
For a typical mortgage, this means a five-year fixed deal is now £651 more expensive than it was two weeks ago, according to Moneyfacts.
Outlook and Expert Commentary
"Borrowers may need to brace for further volatility in the weeks ahead as the global economy braces for a 'Trumpflation' wave flowing from the US and Israel-led action in Iran,"said Adam French, head of consumer finance at the financial information service.
