New mortgages value £788-a-year greater than earlier than Iran struggle as ‘Trumpflation’ hits cash-strapped Brits

Taking out a new mortgage now costs almost £800 a year more than before the outbreak of war in the Middle East two weeks ago.

Brits’ pockets have been hit on multiple fronts amid the financial fallout from the conflict, which has been dubbed ‘Trumpflation’.

The price of a £250,000 two-year fixed-rate mortgage over 25 years has been calculated to have spiked by £788.

This reflects a jump in the interest rate for this deal from 4.83 percent at the start of March to 5.28 percent today – the highest rate since April 2025.

Buyers taking out a new mortgage, as well as homeowners with a fixed-rate mortgage due to refresh, will be hit by the hikes.

In a fixed-rate mortgage, the interest rate is set as constant for a period, usually two or five years, after which it expires and is replaced by a new one. The 5.28 percent figure applies to two-year fixed rates, while five-year fixed rates have jumped from 4.95 percent to 5.32 percent.

Variable deals, however, tend to adjust their prices in line with the national interest rate, set by the Bank of England eight times a year. The Bank’s committee meets on Thursday to set the base for the coming period of roughly six weeks.

The figures, compiled by financial information service Moneyfacts, show that lenders have put not only put up their prices, but also withdrawn some deals since the US and Israel launched joint strikes against Iran on February 28.

A standard new mortgage taken out now is almost £800 more expensive per year than before the Iran war began

The financial fallout has been dubbed ‘Trumpflation’, as it began when the US and Israel launched joint strikes on Iran

 Many of the sub-four percent fixed mortgage offers available just last week have been pulled from the market, according to Moneyfactscompare.co.uk. 

On Tuesday morning, it counted just nine fixed-rate deals with rates below four percent – nosediving from a count of 490 deals on March 9.

Across the mortgage market generally, there were 689 fewer products on Tuesday morning, compared with March 9.

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: ‘Borrowers looking for the lowest fixed rates will be disappointed to see the demise of sub-4 percent mortgages, but they 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.’

Ms Springall suggested that if inflation jumps, there could be an increase to the base rate ‘before the year is over’.

She added: ‘It really is too early to tell what might happen, but borrowers searching for a new deal should seek advice if they are concerned about rising costs.’

Adam French, head of consumer finance at Moneyfacts, said borrowers taking out a new deal could see hundreds of pounds more added to their annual mortgage bill, compared with if they had secured a deal earlier in March.

He said: ‘For a borrower with a £250,000 mortgage over 25 years, that equates to paying £788 more per year on a two-year fix, or £651 more on a five-year deal compared to just a fortnight ago.

‘Choice continues to fall as lenders pull deals and reprice in response to rapidly rising funding costs with 689 fewer mortgage products available since March 9 – almost a tenth of the market.

‘Borrowers may need to brace for further volatility in the weeks ahead as the global economy braces for a ‘Trumpflation’ wave.’

What should households do? 

Brokers are advising households to lock in a deal now or risk substantially higher monthly repayments. 

Burying your head in the sand and hoping for a quick resolution in the Middle East is the worst way to react, they add.  

HSBC still has a two-year fix from 4.01 per cent and Barclays has two-year fixes from 4.1 per cent. The best five-year fixes are priced from around 4.2 per cent upwards.

‘In a market like this, early planning and decisive action can save money and remove a lot of unnecessary stress.

‘The cheapest deals can often disappear overnight, which makes it important to act quickly if you need a mortgage. 

‘If you take too long to send your forms back to your broker or put off choosing a rate or delay checking the market, you could end up paying a significantly higher rate. 

‘While there have been a lot of rate increases there are still some competitively priced mortgages to choose from.’

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