The war in Iran has delivered a \u201csubstantial\u201d shock to the global economy that could lead to an additional 1.3 million UK households paying higher mortgage rates, the Bank of England has warned.<\/p>\n
Officials at the central bank say the conflict will \u201cweigh on growth, increase inflation and tighten financial conditions\u201d, and could push 5.2 million borrowers on to higher mortgage repayments by the final quarter of 2028, up from a previous estimate of 3.9 million.<\/p>\n
The Bank\u2019s Financial Policy Committee (FPC) found that banks were cutting back on mortgage lending by pulling about 1,500 products from the market since America first launched missile attacks on Iran.<\/p>\n
Banks have reduced product availability amid fears that interest rates may need to rise from 3.75 per cent to tame higher inflation caused by the sharp rise in energy prices. The average two-year fixed rate mortgage is 5.84 per cent according to Moneyfacts, the financial data firm, up from 4.83 per cent at the start of March. The average five-year fix is 5.75 per cent, up from 4.95 per cent.<\/p>\n
\u201cThe conflict has made the global environment materially more unpredictable and followed a period in which global risks were already elevated,\u201d the Bank\u2019s committee said.<\/p>\n
\u201cThe ultimate impact on financial stability will depend on the duration, scale and repercussions of the conflict<\/a>, including whether any additional shocks materialise around the same time.\u201d<\/p>\n