Rising UK mortgage rates have nudged borrowers toward short‑term products. After the Middle East conflict lifted gilt yields and swap rates, the average two-year fixed deal climbed to 5.90%, the highest in nearly two years, while five‑year fixes sit at 5.78%. Lenders keep variable trackers near 4%, prompting many to favour two‑year fixes or tracker loans. This shift pressures lenders to rethink pricing across the board.

Brokers say borrowers are now “short‑termist”, betting the rate environment will improve once geopolitical tensions ease. Coreco’s Andrew Montlake notes clients assume the war will end within two years, while Anderson Harris’ Adrian Anderson cites a client who chose a Halifax tracker at 3.96% rather than a 4.85% two‑year fix, saving several hundred pounds per month and avoid higher monthly payments preserving cash flow.

The shift is spilling into the housing market. RICS surveyed agents report weaker buyer demand in March, with new inquiries hitting their lowest level since August 2023. Halifax’s house‑price index showed a 0.5% dip in March and annual growth slowing to 0.8%, indicating fewer buyers are willing to lock in costly mortgages.