‘It feels unfair’: the Britons struggling to get a mortgage since Iran war began

UK mortgage borrowers are confronting sharply higher rates and shrinking affordability after the Iran war upended expectations of Bank of England rate cuts, forcing some buyers to abandon purchases and others to extend repayment terms well past retirement age. The conflict, which began at the end of February, extinguished the prospect of interest-rate reductions widely anticipated at the start of 2026. The renewed inflation threat means the Bank of England is now expected to raise rates at least once this year [1]. The chief executive of Britain’s largest housebuilder described the moment as the most challenging for first-time buyers since the 2008 financial crisis [1]. Panos, a 36-year-old executive sous chef in west London, saw the five-year fixed rate on his prospective mortgage jump from 4.18% in early February to 5.22% by mid-April. “I asked the broker to explain this to me in plain English, and he told me our payments would rise from £2,600 a month to £3,100,” he said. “We could not afford this … We were heartbroken as we had to pull out” [1]. Edward, 47, sold his Staffordshire home last October and rented while searching for a new property. “We were betting on interest rates going down, which seemed an almost certainty at that time,” he said. “Then, when things couldn’t get any worse, the war happened, and mortgage rates just skyrocketed day by day.” The family has since revised expectations downward and is considering homes they would previously have rejected [1]. Jonathan, a 49-year-old academic in Leicester, had a 3.6% two-year fix agreed in January, but the offer was withdrawn in April after the lender changed its borrowing criteria. He has now secured a rate of 5.2%, costing an extra £150 a month, and pushed his repayment date to 2049, when he will be 72 [1]. Grace, a 27-year-old NHS worker in Northamptonshire, had a 4.09% five-year fix agreed in principle, but after a purchase fell through the bank reduced its maximum loan by £54,000, citing affordability and credit-score concerns she disputes. An appeal restored part of the sum, leaving her with a 5.2% rate on a £170,000 mortgage. “I know I’m not the only person experiencing this, but it feels a bit unfair,” she said [1]. Despite the strain on individual borrowers, aggregate lending data paints a more complex picture. UK mortgage approvals unexpectedly rose to 65,945 in April, the highest since January last year and above economists’ forecasts of 62,000, according to Bank of England figures [2]. Lenders pulled deals and raised rates rapidly through March. Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said the “mortgage mayhem caused by the unrest in the Middle East led to a flurry of rate hikes” and an overall reduction of 17% in product choice within a month [3]. The average two-year fixed homeowner rate stood at 5.89% on Thursday morning, edging down from 5.90% after an Iran ceasefire announcement, though Springall cautioned it was “a bit too soon to say whether this is the turning point for borrowers overall” [3]. Rightmove mortgage expert Matt Smith noted that swap rates, which underpin fixed-rate pricing, had previously priced in at least a 0.25% Bank of England cut in March and a possible second reduction later in the year. “The recent shocks that the market has seen due to the Iran war, has meant that lenders’ fixed rate pricing needs to change to reflect the bank rate remaining flat for longer,” he said [4]. Smith added that the longer-term effects on housing will depend on the conflict’s duration and its knock-on impact on living costs. “If it feeds through into higher energy costs or renewed pressure on interest rates, that will be felt in household budgets and ultimately in buying power,” he said, flagging oil-heated properties as particularly exposed because that market sits outside the government’s price cap [4].