Britons taking out a new home loan face paying nearly £800 a year more on average than before the Iran war as “Trumpflation” pushes up UK mortgage rates, according to Moneyfacts.

Nearly 700 mortgage deals have been pulled by lenders as the economic fallout from the war results in the biggest upheaval since the aftermath of Liz Truss’s disastrous mini-budget in 2022.

“War in the Middle East has added almost £800 to a typical annual mortgage bill in just two weeks, which will be unwelcome news for anyone currently seeking a fixed-rate deal,” said Adam French, the head of consumer finance at the data company Moneyfacts.

“The average two-year fixed rate has jumped from 4.83% at the start of March to 5.28% today – its highest level since April 2025. The average five-year fix has risen from 4.95% to 5.32%, now at its highest since February 2025.”

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

The upward march of home loan costs is a blow to buyers and those hoping to remortgage. About 1.8m fixed-rate deals are due to end in 2026, and most of these borrowers will need to get a new mortgage.

The change of direction comes amid the global shock waves caused by the war. Before the conflict, economists had anticipated two cuts to UK interest rates in 2026 after the four announced by the Bank of England last year.

Now the pre-eminent concern is that the higher oil and gas prices will stoke inflation. That uncertainty has pushed up the money market swap rates that lenders use to decide rates on their new fixed mortgages.

Financial experts now expect the Bank to hold rates at 3.75% at its policy meeting on Thursday, with cuts off the table. Before the war, the central bank was widely expected to cut rates on Thursday.

If inflation spikes, some commentators say interest rates could rise before the end of the year.

There are now just nine fixed-rate deals with rates below 4% on the market – sharply down from a count of 490 at the start of last week, according to the Moneyfacts data.

“Choice continues to fall as lenders pull deals and reprice in response to rapidly rising funding costs,” said French. “Borrowers may need to brace for further volatility in the weeks ahead as the global economy braces for a ‘Trumpflation’ wave flowing from the US- and Israel-led action in Iran.”