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Fri, 17 Apr 2026

Fri, 17 Apr 2026 Mortgage rates show signs of falling after Iran war peak

Major lenders make rate reductions as markets take some heart from a possible truce in the Iran war.
Mortgage lenders are reducing their rates on new mortgage deals, which is good news for first-time buyers who have been struggling with high borrowing costs due to the Iran war. The rates were expected to keep rising as the war escalated, but now that hopes for a long-term truce are growing, the cost of borrowing has started to fall. The rate reductions are "meaningful" and could be a significant help to first-time buyers who have been hit hard by the economic impact of the war. However, experts warn that the situation is still delicate and borrowers should be prepared for sudden changes in mortgage costs. For example, Amy Worrell and her boyfriend Tommy Adeyemi, who are buying their first home together in Hertfordshire, saw their mortgage rate rise sharply before it started to fall again. They had been saving hard for five years and were worried that the high interest rates would make it impossible for them to get a mortgage. The cuts in mortgage rates have been caused by changes in the financial market, particularly the "swap rates" which reflect the market's view of future interest rate rises. With hopes of an end to the war growing, swap rates have fallen and lenders are responding by reducing their rates on new mortgage deals. The average rate on a two-year fixed deal has dropped from 5.90% to 5.87%, but experts warn that this could change quickly again. Borrowers are advised to act fast if they want to take advantage of the lower rates, as there is no guarantee that they will continue to fall. Experts also recommend that borrowers build a financial buffer in case of future changes in mortgage costs. With thousands of mortgage deals still available and lenders offering bigger loans than before, first-time buyers should not give up on their dreams of owning a home.