Bank of England: Iran War "Shock" to Impact 1.3M Additional Mortgages

The Iran war "economic shock" pushes the total number of UK households facing mortgage increases to 5.2 million, as the Bank of England signals higher-for-longer interest rates.

By: AXL Media

Published: Apr 1, 2026, 11:36 AM EDT

Source: BBC new

The "Shock" to Borrowing Costs

The Bank’s Financial Policy Committee (FPC) noted that the sharp rise in oil and gas prices—triggered by the U.S.-Israel strikes on Iran—is driving up the cost of government borrowing. This volatility has several direct consequences for the UK housing market:

Inflationary Pressure: Higher energy costs may force the Bank to keep interest rates at their current 3.75% or even raise them further to combat inflation.

Withdrawn Products: The number of available mortgage products has shrunk from roughly 8,500 to 7,000 in just one month as lenders pull cheap deals.

Fixed-Rate Climbs: As of April 1, 2026, the average two-year fixed deal has reached 5.84%, while the five-year average sits at 5.75%.

Resilience Amid Deterioration