According to Moneyfacts, mortgages below 4% are disappearing due to a revolution in home loan pricing following the conflict in the Middle East.
Moneyfacts said a cut in the Bank of England’s base rate looks “increasingly unlikely” and that the group of lenders offering fixed rates below 4% have “taken a significant hit”.
All the major banks, namely Barclays, HSBC, Lloyds Bank, NatWest and Santander, have increased interest rates since the beginning of March.
The average two- and five-year fixed interest rate agreement is now more than 5%according to Moneyfacts analysis last week.
Barclays, HSBC, NatWest, Nationwide and Santander no longer offer fixed deals below 4%, which were available last week.
Based on data from the first month of the market, the last time the lowest two- and five-year fixed rates were priced above 4% was over a year ago, in February 2025.
The Bank of England’s base rate was cut to 3.75% in December 2025. Since then, the average standard variable rate (SVR) has fallen by 14 basis points, from 7.27% to 7.13%. Year-on-year, the base rate has fallen by 75 basis points, but the average SVR has fallen by only 55 basis points.
Moneyfacts finance expert Rachel Springall said: “Borrowers looking for the lowest fixed rates will be disappointed to see the demise of sub-4% mortgages, but these are not sustainable as swap rates rise.
“In an unprecedented turn of events, unrest in the Middle East has led to rising swap rates, inflating mortgage rates and taking deals off the market, some temporarily.
“These developments have undermined expectations that the Monetary Policy Committee would vote for a cut in the Bank of England’s base rate, with a cut now much more likely this week. If this uncertainty persists, and if inflation does indeed rise, we could even see a rise in the base rate before the year is out.
“It’s really too early to tell what might happen, but borrowers looking for a new deal should seek advice if they are concerned about rising costs.”