Middle East War Raises Mortgage Rates in UK, US

The ongoing war in the Middle East, involving Iran, Israel, and the United States, has triggered sharp increases in mortgage rates and cooled housing markets across the United Kingdom and the United States since late February, economists and real estate experts say. The conflict, which began with a joint U.S.-Israeli attack on February 28, has disrupted global oil supplies by effectively blocking the Strait of Hormuz, a vital shipping route, leading to soaring energy prices and heightened inflation fears.

In the UK, two-year fixed mortgage rates have risen from an average of 4.84 percent to 5.84 percent over the past month, the steepest jump since the 2022 mini-budget crisis, according to data from financial analysts. Five-year fixes have climbed from 4.96 percent to 5.75 percent. Lowest available two-year deals have increased from 3.51 percent to 4.60 percent, adding about 151 pounds monthly, or 1,812 pounds annually, to payments on typical loans. Average rates now hover around 5 percent, with some lenders pushing beyond 6 percent, potentially costing homeowners up to 4,300 pounds more per year. This surge stems from market expectations of persistent inflation, limiting the...