If you've opened a newspaper or scrolled through your phone in recent weeks, you would be forgiven for thinking the mortgage market is in freefall. The headlines have been dramatic, and the numbers at first glance look alarming. But at RM Financial, we believe context matters, and right now a bit of perspective could stop people making costly decisions based on panic.
Let’s look at what is actually happening, why it is happening, and where things really stand.
When US and Israeli forces launched military action against Iran on 28th February 2026, the impact reached the UK mortgage market almost immediately. Iran’s closure of the Strait of Hormuz, which carries around 20% of the world’s oil supply, pushed energy prices sharply higher, with Brent crude moving past $100 per barrel.
That fed directly into swap rates, which are what lenders use to price fixed mortgages. As those increased, lenders repriced quickly. Over 1,200 mortgage products were withdrawn within a matter of weeks. Lenders including HSBC, Nationwide and Danske Bank all increased rates, in some cases more than once.
Headline averages suggest rates have moved into the mid to high 5% range, which is what is driving much of the media narrative.
For someone borrowing £250,000, that can still mean a noticeable increase in monthly repayments.
It is understandably unsettling.
What is missing from most headlines is perspective. This is not the worst mortgage market we have seen in recent years.
In autumn 2022, following the mini Budget under Liz Truss, the market moved far more aggressively. Two-year fixed rates exceeded 6.5% and nearly 1,700 mortgage products were withdrawn in a very short space of time.
What we are seeing now is a shock, but not at that level. Product availability has reduced by around 17% compared to roughly 22% during that period.
Looking at April 2025 also helps. While some of the lowest headline rates dipped into the high 3% range, the average borrower was still paying well above 4.8%.
So while sentiment feels negative, the market is still operating within a range we have seen before.
This is where the headlines can be misleading.
While average rates are being reported in the mid to high 5% range, that is not where many buyers are actually transacting.
At present, the lowest available two-year fixed rate for a first-time buyer with a 15% deposit is around 4.84%.
That is a more accurate reflection of real pricing for well-positioned buyers today, and importantly, those products are still available in the market.
During periods like this, the most common mistake is waiting. People hold off, hoping rates will settle before they act.
Sometimes that works, but often it leads to higher overall costs.
The Bank of England base rate is currently 3.75%. Despite inflation pressures linked to energy prices, the Bank has taken a cautious approach and has not rushed into further increases.
If the current geopolitical situation stabilises, there is still a reasonable case for rate reductions later this year based on weak economic growth and a softening labour market.
However, what tends to happen when rates begin to fall is just as important.
Buyers who have been waiting come back into the market quickly. Demand increases, competition builds, and property prices rise.
In practice, this often means that waiting for a lower interest rate results in paying more for the property itself. The benefit of the lower rate is often reduced or lost entirely.
For borrowers coming to the end of a fixed rate, this becomes more immediate.
Around one million fixed-rate mortgages are due to end between April and September 2026. Many of those borrowers will move onto standard variable rates, which are currently close to 8%.
That is a significant jump compared to securing a new deal today.
This is why some advisers are discussing short-term tracker mortgages as part of the conversation. These can offer flexibility, particularly as they often have no early repayment charges and allow borrowers to move onto a fixed rate later if conditions improve.
They are not suitable for everyone, but they are worth considering in the current environment.
There will always be headlines during periods of uncertainty. Markets will move and global events will continue to have an impact.
Mortgage markets are cyclical and they have gone through far more extreme conditions than this.
The bigger risk right now is not just higher rates. It is making a decision based on short-term noise rather than a clear long-term view.
If you want to talk through your options properly, we are here to help.
