Average mortgage rates in the UK have flown past 5% as lenders scramble to respond to growing turmoil in the home loan market caused by the Middle East war.

Nearly 500 mortgage deals have been pulled in the past 48 hours in what is the biggest upheaval since the aftermath of the 2022 mini-budget.

Big high street names including HSBC, Nationwide, Halifax and Barclays are among lenders to have pushed through rate rises. On Wednesday morning, HSBC said a second round of price increases would take effect across a wide range of products from Thursday.

“Recent days have been some of the most turbulent in the UK mortgage market since the aftermath of the September 2022 mini-budget,” said Adam French, head of consumer finance at data firm Moneyfacts. “In the last 48 hours, almost 500 residential mortgage products have been withdrawn as lenders reacted to rapidly rising swap rates.”

However, French said that the scale of product withdrawals was “nowhere near the shock seen in late September 2022 when 935 products, which accounted for more than a quarter of the market at the time, disappeared in a single day”.

The average two-year fixed-rate mortgage hit 5.01% on Wednesday, according to the data firm. This compares with 4.84% on the eve of the US-Israeli war on Iran and represents a return to highs seen last summer. The typical rate on a five-year deal is now 5.09%.

The upward march of home loan costs is a blow to buyers and those looking 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 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 base rate to be held at 3.75% at the central bank’s meeting on 19 March. The chance of a cut was put at 80% before the conflict. The probability of a rate reduction this year has fallen to 20%, from 50% on Tuesday.

Households had been benefiting from cheaper home loans in recent months and French said it was unwelcome news for borrowers that falling rates had quickly given way to rises.

“How far they could go is now heavily dependent on how global markets and inflation expectations evolve as conflict in the Middle East unfolds,” he said.