A cut to Bank of England Base Rate tomorrow looks increasingly unlikely, and there’s even a risk of the rate rising later this year, warns Moneyfacts.
It says the Iran War has scuppered homes for the Monetary Policy Committee to vote for a cut to the Bank of England base rate tomorrow.
And Moneyfacts warns that if such uncertainty is prolonged, and indeed if inflation spikes, “we could even see an increase to base rate before the year is over.”
The service says sub-4% fixed mortgages have effectively vanished.
All of the biggest banks – namely Barclays, HSBC, Lloyds Bank, NatWest and Santander – have increased rates since the start of March.
And it warns that prolonged market uncertainty can lead to further rate increases or product withdrawals.
Barclays, HSBC, NatWest, Nationwide and Santander no longer offer sub-4% fixed deals, which were available last week.
Across the market, the last time the lowest two- and five-year fixed rates were priced above 4% was over a year ago, in February 2025, based on first of month data.
Year-on-year average mortgage rates across the two-, five- and 10-year fixed sector have fallen, but recent increases have pushed the average two- and five-year rates above 5%.
The Bank of England Base Rate was cut to 3.75% in December 2025 but since then, the average standard variable rate (SVR) has fallen by 0.14%, from 7.27% to 7.13%.
Year-on-year, Bank of England base rate has fallen by 0.75%, but the average SVR has fallen by just 0.55%.
The Moneyfacts Average Mortgage Rate has fallen over the last 12 months, from 5.33%; last month the rate was 4.90%, but it has recently breached 5%.
Rachel Springall, finance expert at Moneyfacts, comments: “Sub-4% mortgages … are not sustainable with swap rates increasing.
“Lenders look at margins very carefully, so it would be unwise to price their deals too low, if the expectations are for interest rates to rise, even if over the short-term.
“The mortgage market needs stability, and really, borrowing costs are lower than in recent years, and we have had sub-4% deals on the shelves for over a year (since February 2025).
“While many of the biggest lenders no longer offer a sub-4% fixed deal, it is a cautious decision.
“Mortgage rates are rising due to global pressures, not UK fiscal policy, so while not ideal, rate increases are not mirroring the ‘mini-Budget’ fiasco in 2022.”
She says that in an unprecedented turn of events, the unrest in the Middle East has led to rising swap rates, which has inflated mortgage rates and caused deals to be pulled from sale, some temporarily.
*Average standard variable rate (SVR) is currently 7.13%. Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis. SVR repayment £1,787 per month, versus £1,502 per month on 5.28% two-year fixed rate.
