LONDON, April 8, 2026, 12:08 BST
Mortgage rates in Britain look set to remain high, despite a two-week ceasefire between the U.S. and Iran that calmed markets on Wednesday. Households trying to remortgage now face a pricey spring. Halifax reported a 0.5% drop in UK house prices for March—an early indication that higher borrowing costs are beginning to weigh on demand.
The truce has knocked oil prices down and cooled expectations for more Bank of England tightening, taking off some immediate heat. Still, according to lenders and brokers, the move is more likely to slow the pace of rate hikes than bring fast relief. That’s critical for borrowers whose cheap fixed-rate deals are expiring—they’re stepping into a sharply repriced market. On top of that, some landlords are juggling fresh tax-reporting requirements and new rental-law changes in England.
Press Association, citing Moneyfacts, reports the average two-year fixed mortgage rate for homeowners has surged to 5.90%, up sharply from 4.83% in early March. Five-year fixes aren’t far behind, sitting at 5.78%, compared to 4.95% previously. Moneyfacts is calling this the worst jolt since the 2022 mini-budget. Adam French, head of consumer finance, adds that while markets look steadier now, borrowers shouldn’t count on lower rates anytime soon—he says higher rates could stick around “for some time yet.” LBC
Borrowers are shifting strategy. Moneyfacts search data out Wednesday shows a 13% jump in demand for two-year fixes in just a month. Five-year fixes slipped, and remortgage borrowers slashed their five-year deal searches by 15%. The numbers point to a clear preference: many households appear more willing to stomach short-term pain than commit to pricier, long-term debt.
Halifax quantified the pressure, with the average UK house price dipping to 299,677 pounds in March. Annual growth, now at 0.8%, came in below economists’ expectations. That’s a miss not shared by Nationwide, which posted a strong jump in March prices. “Momentum” has faded, said Amanda Bryden, head of mortgages at Halifax, pointing to jitters over the Middle East conflict. HALIFAX
Housing hadn’t been struggling ahead of the shock. The Bank of England’s numbers put mortgage approvals for purchases at 62,584 in February—highest since November 2025. Still, once the conflict started, RICS said buyer enquiries dropped off fast, warning that rates might remain “higher for longer.” Reuters
Buy-to-let landlords — those who finance home purchases to rent out — are feeling the strain beyond just higher mortgage rates. As of April 6, HMRC’s Making Tax Digital initiative kicked in for landlords and sole traders earning more than 50,000 pounds from a mix of property and self-employment, meaning quarterly digital reporting is now mandatory. England’s Renters’ Rights Act cuts most no-fault evictions from May 1. And in March, NRLA data showed 38% of single-property landlords said they’re unlikely or very unlikely to stick it out in the sector through 2026.
Still, a sharp jump in rents isn’t on the cards just yet. Zoopla reported a 1.9% rise in average rents for new leases over the year to March. The pool of available rental homes grew 11% compared to a year ago, though supply sits 23% beneath where it was before the pandemic.
Still, that sense of relief might not stick around for long. Money markets are now pricing in just one Bank of England rate hike this year—previously, expectations pointed to at least two. Analysts don’t expect bond yields to snap back to where they were before the war anytime soon. Any bounce in oil prices or a breakdown of the ceasefire could push swap rates higher, forcing lenders to reprice fixed mortgages once again.
So far, homeowners are left with an uncomfortable takeaway: markets have calmed down, but those remortgaging are still looking at higher payments, first-time buyers remain cautious, and small landlords have more incentive to consider selling.
