UK mortgage rates rise as war on Iran uncertainty hits housing market

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Published Jun 16, 2026

In the United Kingdom, the war on Iran is contributing to rising mortgage rates, increasing pressure on the housing market—one of the key drivers of the British economy.

The average two-year fixed mortgage rate has risen from 4.83% at the start of March to 5.66% now. Meanwhile, the average five-year fixed-rate mortgage has increased from 4.95% to 5.62%.
This rise, combined with wider economic uncertainty linked to the conflict, is also affecting house prices. Lenders and estate agents report that prices fell by 0.6% in May—the fastest monthly decline in almost a year.

They also predict that average UK house prices could fall by around 2% over the course of this year if conditions persist.

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