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Mortgage Rates Climb in UK and U.S. After Energy Shock Lifts Yields

Rising swap and bond yields tied to the Iran conflict are forcing lenders to reprice deals, raising borrowing costs.

Overview

  • UK two-year fixed mortgage averages have risen to about 5.35% from 4.83%, adding roughly £900 a year on a £250,000, 25-year loan, according to Moneyfacts.
  • More than 500 UK mortgage products were withdrawn or repriced over the past week, with sub‑4% offers from major lenders such as Nationwide, Barclays and HSBC disappearing.
  • The Bank of England kept the base rate at 3.75% as it warned of energy-driven inflation risk, and market pricing has shifted toward the possibility of further increases in 2026.
  • In the U.S., the 30-year fixed rate rose to 6.22% for the week ending March 19 per Freddie Mac, daily readings moved back above 6.5%, and mortgage applications fell about 11% on the week.
  • Sonia and swap rates have jumped to their highest in over a year—two-year near 4.21% from 3.36% on Feb. 27 and five-year near 4.13% from 3.41%—lifting lenders’ funding costs and feeding into higher fixed-rate pricing.