Halifax, HSBC, and Santander Cut UK Mortgage Rates After Iran War Peak

Mortgage rates in the United Kingdom showed signs of falling after a peak tied to the Iran war, as major lenders made “meaningful” cuts on new deals, bringing “some solace to first-time buyers hit by the economic impact of the Iran war,” the BBC reported.

“- Published Major mortgage lenders are making "meaningful" cuts to the rates on new deals, bringing some solace to first-time buyers hit by the economic impact of the Iran war”

BBC

The BBC said money markets were reacting to “hopes of a long-term truce in the war” and that the “recent rapid rise in borrowing costs has halted and is now starting to reverse.”

BBC

The BBC tied the pricing of fixed mortgages to “swap rates,” which “reflect the market's view of which direction the Bank of England's interest rates will go,” and said easing swap rates gave lenders scope to lower rates.

It reported that lenders including Halifax, HSBC and Santander lowered rates on new fixed mortgage deals, and quoted broker Trinity Financial’s Aaron Strutt saying, “The price cuts are getting more momentum.”

Moneyfacts data cited by the BBC put the average rate on a two-year fixed deal at 4.83% at the start of the conflict, rising to a peak a week ago of 5.90%, before dropping to 5.87%.

The BBC also warned that the situation remains “delicate,” with borrowers still exposed to “the possibility of sudden shifts in mortgage costs,” and quoted Mortgage Confidence’s Jo Jingree saying, “For anyone who has been waiting for reductions, now might be the time to secure a rate.”

In the United Kingdom, Santander became the first major lender to cut mortgage rates since the start of the Iran war, according to The Independent, which said the bank would reduce rates across its higher loan-to-value mortgages by up to 0.3 per cent from Thursday.

The Independent reported that Santander’s changes included “up to 0.28 per cent being cut from two-year fixed deals at 85-95 per cent LTV,” bringing “the lowest rate on a two-year deal down to 4.9 per cent.”

CNN Arabic

It added that Lloyds offered a two-year fix at 85 per cent LTV for 4.89 per cent for first-time buyers, while Nationwide’s lowest two-year fix was 4.88 per cent.

For trackers, The Independent said Santander cut its 90 per cent two-year tracker rate for first-time buyers by 0.3 per cent, and made a smaller 0.25 per cent cut to its 60 to 95 per cent two-year tracker rates for movers.

It also said TSB was set to follow Santander’s lead by cutting selected two-year house purchase rates by up to 0.45 per cent.

The Independent quoted mortgage broker Nicholas Mendes at John Charcol saying, “After what has been a very turbulent few weeks, this is probably the first point where the market feels a little more settled.”

It also quoted Knight Frank Finance partner Hina Bhudia saying, “This marks the first meaningful relief for borrowers since the conflict in the Middle East began and should signal the start of a broader market repricing lower.”

The Independent cautioned that the cut was “selective, not broad-based,” and said it was “still unclear when sub-4 per cent mortgages will re-emerge,” while quoting Bhudia that “matters could still change quickly in the opposite direction.”

UK house prices fell as higher mortgage rates driven by the Iran war reduced demand, Oz Arab Media reported, citing Halifax data that “UK house prices fell 0.5% in March.”

“The war with Iran has disrupted Wall Street, raising mortgage costs, auto loan costs, and credit card expenses, and making daily life more expensive for Americans”

CNN Al-Eqtisadiah

The outlet said the median property price was now “£299,677,” and that annual growth also slowed, describing the decline as coming after a “0.3% rise in February before the conflict began.”

Oz Arab Media linked the earlier rise to higher energy costs and said fears had grown that inflation could rise and that there would be no rate cuts this year.

It reported that “Hundreds of the cheapest listings have disappeared in recent weeks,” and quoted Halifax’s head of mortgages, Amanda Braden, saying, “The latest slowdown in the housing market reflects the wide uncertainty surrounding the Middle East conflict.”

The piece also stated that, despite volatility in oil prices, “UK mortgage rates have not improved,” and it repeated Moneyfacts figures that “The average rate on a two-year fixed deal was 4.83% at the start of March, but is now 5.90%, according to Moneyfacts.”

It added that experts said the duration of weak demand would depend on how persistent pressures were and how they affected the broader economy and unemployment, quoting Adam French of Moneyfacts saying the housing market could stabilize if the ceasefire holds but would likely “slow down or pause rate hikes rather than trigger sharp declines.”

Across the United States, multiple outlets tied mortgage costs to the Iran war and to Treasury yields, while reporting that rates fell this week to 6.37% for the 30-year fixed mortgage.

CNN (Economica) said “Mortgage rates rose for five consecutive weeks after the war began, but this week they fell to 6.37% for the 30-year fixed-rate mortgage, according to Freddie Mac,” and it described Wall Street declines amid a fragile ceasefire.

Los Angeles Times

It reported that “in late February, just two days before the United States and Israel began their joint strikes on Iran, the average 30-year fixed mortgage rate fell to 5.98%, marking a drop below 6% for the first time in more than three years.”

CNN (Economica) also explained the mechanism, saying “Mortgage rates tend to track the yield on the 10-year U.S. Treasury,” which rose as investors watched “higher oil prices, inflation concerns, and the possibility of increased government spending to fund the war.”

The outlet said the 10-year Treasury yield “rose from below 4% at the end of February to 4.48% in March, before stabilizing around 4.3% this week,” and quoted Jeffrey Roach of LPL Financial saying, “Investors now recognize the likelihood of a protracted war with Iran, and what that could mean for the economy; the longer the global oil supply remains tight, the greater the risk of inflationary pressures.”

CNN Arabic similarly reported that mortgage rates “fell this week to 6.37% for the 30-year fixed mortgage, according to Freddie Mac,” and it stated that the 10-year Treasury yield “rose from under 4% at the end of February to 4.48% in March, and has traded around 4.3% this week.”

It added a cost comparison for a $500,000 home with 20% down, saying the annual principal and interest would be “about $28,700 a year” at 5.98% versus “$29,931” at 6.37%, and that “over the 30-year term, today’s buyer would pay more than $36,000 more than a February buyer.”

In Los Angeles, the Iran war’s impact on mortgage rates deepened a housing market freeze and left first-time buyers unable to afford starter homes, the Los Angeles Times reported.

“English Version: UK House Prices Decline Due to Iran War Impact on Demand”

Oz Arab Media

It said L.A. County recorded “just 3,072 home sales in January — the lowest monthly total in three years,” while a national gap widened to “a record 630,000 more sellers than buyers.”

Oz Arab Media

The outlet described how ceasefire-related rate declines sparked activity, with one agent saying “new escrows are up in L.A. County,” though it said sales data had not yet reflected the momentum.

It quoted Katie Davis, who said, “I just want a little starter house in El Sereno, but somehow it feels contingent on whether the Strait of Hormuz is open or not,” and it reported that “$200 more for a monthly payment is the difference between keeping up with a loan or being crushed by it.”

The Los Angeles Times reported that mortgage rates rose back up to “6.46%” and that the median L.A. home for sale spent “80 days” on the market in February, the longest median in the last five years, according to Redfin.

It also said “17.6% of home listings had price cuts, up 1.4 percentage points year over year,” and quoted real estate agent Bret Parsons saying, “Buyers are slower to pull the lever,” adding, “When a big event happens, buyers get nervous.”

The outlet quoted Ashley Moorhead saying, “February was brutal because we thought we were in a buyer’s market,” and it described how she locked in a “5.99% mortgage rate right before the war started” but would have faced “6.5%” if she had waited a month.

It also reported that in one case she was outbid for a home in Pasadena by “$225,000,” and that her ideal budget was “$1.25 million” before she ended up spending “$1.39 million.”