{"id":507160,"date":"2026-04-01T13:48:09","date_gmt":"2026-04-01T13:48:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/507160\/"},"modified":"2026-04-01T13:48:09","modified_gmt":"2026-04-01T13:48:09","slug":"iran-war-may-increase-mortgage-payments-for-extra-1-3m-households-says-bank-of-england-mortgages","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/507160\/","title":{"rendered":"Iran war may increase mortgage payments for extra 1.3m households, says Bank of England | Mortgages"},"content":{"rendered":"

The US-Israel war on Iran<\/a> could end up increasing monthly mortgage payments for more than one million more UK households, the Bank of England has predicted, adding that the conflict had dealt \u201ca substantial negative supply shock\u201d to the world economy.<\/p>\n

Financial market jitters over the conflict in the Middle East have resulted in banks pulling about 1,500 mortgage products, with many banks raising interest rates<\/a> on their remaining 7,000 home loan products in recent weeks, the Bank\u2019s financial policy committee (FPC) said.<\/p>\n

The increases, named \u201cTrumpflation\u201d<\/a> after the US president, have put pressure on households preparing to sign on to new mortgage contracts, with the Bank now forecasting that about 5.2 million borrowers \u2013 or roughly 58% of borrowers across the country \u2013 could face higher mortgage payments by the end of 2028.<\/p>\n

That compares with 3.9 million before the conflict began, adding 1.3 million borrowers to the list of households that could have their finances squeezed.<\/p>\n

The data provider Moneyfacts reported on Wednesday that the average two-year fixed residential mortgage rate was now 5.84%, up from 4.83% at the start of March.<\/p>\n

Caitlyn Eastell, a personal finance analyst at Moneyfacts, said: \u201cIt has been just over a month since the start of the Middle East conflict, and the impact on borrowers has been almost immediate as borrowing costs sharply rose.\u201d<\/p>\n

The FPC said that a prolonged war increased the possibility of \u201clarge, frequent and possibly overlapping shocks\u201d that could put global financial stability at risk.<\/p>\n

Overall, the UK\u2019s economic outlook had deteriorated, increasing pressure on households and businesses, the FPC said. It added that a prolonged conflict could end up amplifying risks that were bubbling up before the conflict began, including pressures on government debt markets, exceptionally high valuations of AI companies<\/a>, and risky loans arranged by private credit firms operating outside the regulated banking system.<\/p>\n

\u201cThe conflict in the Middle East has resulted in a substantial negative supply shock to the global economy,\u201d the FPC said. \u201cThe financial system has been resilient so far.\u201d<\/p>\n

However, the committee added: \u201cThe conflict has made the global environment materially more unpredictable and followed a period in which global risks were already elevated. This increases the possibility of large, frequent and potentially overlapping shocks and periods of intense volatility.\u201d<\/p>\n

The potential for multiple, simultaneous shocks, it said, could end up \u201camplifying their effect on financial stability and ultimately, the provision of vital financial services to UK households and businesses\u201d.<\/p>\n

It said that lenders, investors and other financial firms should steel themselves by assessing any potential weaknesses that could expose them to further global shocks. \u201cThis should include incorporating scenarios involving further sudden and significant price adjustments to their stress testing and liquidity preparedness, the committee said.<\/p>\n

\u201cPreparing for market stress events should help mitigate the risk of financial institutions\u2019 behaviours amplifying any vulnerabilities that materialise.\u201d<\/p>\n

The committee noted the impact that the conflict has had on sovereign bonds, including UK gilts, which raise money for the government on international markets. It said weaker growth prospects, higher interest rates and increased pressure on spending could limit governments\u2019 ability to respond to future shocks and worsen vulnerabilities in the debt market.<\/p>\n

Part of that was linked to a trend whereby international hedge funds have become notable holders of government debt. \u201cSuch dynamics increase the risk of a disorderly unwind of positions causing a jump to illiquidity in core markets,\u201d it said.<\/p>\n

Last month, the Bank kept interest rates on hold at 3.75% but financial markets now expect it to raise rates twice this year.<\/p>\n

The Bank of England<\/a> governor, Andrew Bailey, said markets were getting ahead of themselves by pricing in interest rate hikes in respect to the impacts of the Iran war.<\/p>\n

\u201cWe have to deal with the shocks that come our way. But our remit is very clear \u2026 we have to do so in a way that \u2026 causes the least damage in terms of activity in the economy and in terms of jobs,\u201d he said in an interview with Reuters.<\/p>\n

Regarding market forecasts for rate hikes, Bailey added: \u201cI would still say that is a judgment markets have to make but I think they\u2019re getting ahead of themselves.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The US-Israel war on Iran could end up increasing monthly mortgage payments for more than one million more…\n","protected":false},"author":2,"featured_media":507161,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-507160","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/507160","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=507160"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/507160\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/507161"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=507160"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=507160"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=507160"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}