Some mortgage products are beginning to reappear in the market, but they come with significantly higher interest rates.
Lenders are preparing to reach out to 1.6 million homeowners whose fixed-rate deals are set to expire before the end of the year, according to financial data provider Moneyfacts.
The average two-year fixed-rate mortgage for homeowners has sharply increased from 4.83% at the beginning of March to 5.75% as of last Friday, marking the highest level since August 2024.
Similarly, the average five-year fixed-rate mortgage rose from 4.95% to 5.69%, the highest level since December 2023.
Moneyfacts attributed this surge to decreased market liquidity and rising costs for lenders. Swap rates, which banks use to price mortgages, have climbed amid growing economic uncertainty.
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Analysts also highlight the impact of the conflict in the Middle East, which has driven inflation expectations higher and placed additional pressure on borrowing costs.
The market has seen hundreds of mortgage deals disappear as lenders adjust their offerings to reflect the new financial landscape. Homeowners nearing the end of their fixed deals now face a more expensive borrowing environment, with rates that could increase monthly repayments by hundreds of pounds compared to earlier in the year.
The combination of geopolitical tensions, inflationary pressures, and stricter lending conditions underscores the challenges UK borrowers face. This situation illustrates the delicate relationship between global events and domestic mortgage markets.
Adam French, head of consumer finance at Moneyfacts, said: “Mortgage rates have continued to rise sharply, with around three in four active lenders increasing rates, launching or withdrawing products this week.”
He added: “Products have been slowly trickling back on to the market in recent days, with 160 added since Wednesday, but priced at much higher rates than previously which has been driving up average rates on new mortgages.
“There is still a net 1,620 fewer products on the market than there were when lenders began pulling deals in response to rising funding costs on March 9 2026.”
French said: “Getting lenders to recommit to the charter is welcome news at a time when many households are facing a sharp rise in borrowing costs.
“If these measures are fully back in play, they can offer borrowers some flexibility, but it’s important to be clear that they often come with very real trade-offs.
“Options such as extending a mortgage term or switching to interest-only can ease monthly pressures in the short-term but increase the total cost of borrowing over time, so they need to be carefully considered and clearly explained by lenders and brokers.
“While these measures may provide some breathing space and help households avoid falling into a debt trap, they do not solve the underlying affordability challenge.
“Many borrowers coming up for remortgage are now facing the prospect of paying thousands of pounds more per year than they would have expected just a few weeks ago, at a time when inflationary pressures are once again building.
“For some, this support may help keep their budgets just about manageable, but it won’t remove the financial strain altogether.”
A spokesperson for UK Finance said: “Mortgage lenders provide a wide range of support to their customers. Help will always be available and anyone worried about their mortgage should get in touch with their lender as early as possible.”
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