MORTGAGE rates rose during July as swap rates edged higher due to growing unrest in the Middle East fuelling inflationary fears.
Brokers warned borrowers not to take rate cuts for granted in any climate, let alone the current one, and said it is an example of “how twitchy pricing has become”.
The Moneyfacts Average New Mortgage Rate rose by 0.12%, from 5.47% in July to 5.59% at the start of August, reversing the prior monthly cut. The rate had fallen by 0.12% from 5.59% in June. The rate was last below 5% in March 2026 (4.90%).
Fixed rates rose month-on-month for the first time since April, with the average two- and five-year fixed rates rising by 0.11% and 0.14% respectively, to 5.63% and 5.66%.
Mortgage product churn continued throughout July, with the average shelf-life of a deal falling to 11 days, three days less than the month prior and the lowest since April 2026 (eight days).
Moneyfacts says mortgage availability remains strong. For a fourth consecutive month, product choice rose, this month by 180 deals to 7,357. The recovery of choice means that 90% of deals withdrawn between March and April have returned.
Borrowers with a limited deposit or equity of just 5% will find the average five-year fixed rate at 95% loan-to-value (LTV) rose above 6%.
Rachel Springall, Finance Expert at Moneyfacts, said: “Lenders were somewhat forced to U-turn on fixed rate cuts in July, knocking back the short-lived progress of three consecutive months of reductions to the average two- and five-year fixed rates.
“Persistent concerns over the future outlook of interest rates led to swap rate volatility, driven by unrest in the Middle East. The prolonged conflict has driven up oil and energy prices, raising inflationary fears, which could in turn lead to future base rate increases by the Bank of England.
“Due to the swift action of lenders to re-price their ranges last month, the average shelf-life of a mortgage dropped to 11 days, now its lowest recorded since April, when mortgage turmoil pushed the lifespan of a mortgage down to just eight days.
“The limited timeframe makes it ever more essential to seek advice early, particularly those who are due to remortgage this year. Borrowers could choose to refinance with their existing lender for ease, but it’s always wise to shop around first to get a sense of the new rates on offer, particularly if coming off a low-rate deal.
“According to the Bank of England, 750,000 households with a fixed rate set to expire in 2026 are currently paying rates below 3% and are expected to face an average repayment increase of around £170 per month. Waiting too long to secure a new deal could be an expensive mistake, as the average revert rate is above 7%.”
Matt Coulson, Founder at Rickmansworth-based Heron Financial, a broker, said: “July basically undid June. The average new rate is up 0.12%, which is exactly what came off the month before, so a lot of borrowers are back where they started after a month of noise.
“It’s worth being clear about what’s driving it: this is swap rates reacting to the Middle East and the oil price, rather than the Bank of England changing course.
“Moves like that can unwind as fast as they arrive, so I’d be wary of reading a few weeks of churn as a new direction. What it does show is how twitchy pricing has become.
“Deals are lasting barely a fortnight, and it’s the borrowers with the least room who feel it most, with some five-year fixes at 95% loan-to-value now back above 6%.
“The bigger picture hasn’t shifted. Until the monthly cost of borrowing genuinely comes down and stays down, this is what I’d expect: small moves in both directions, and a market that stays stuck rather than turning.”
Katy Eatenton, Mortgage & Protection Specialist at Weybridge-based Eatenton Finance, said “July was yet another example of how quickly rates can turn and why assuming they will continue to fall is a dangerous game for borrowers to play“.
She added: “The mortgage market remains volatile and people should not take cuts for granted.”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, said: “Increased tensions in the Middle East during July saw the price of oil rise again, which would feed inflation and potentially see the base rate hiked or at least stay higher for longer.
“Lenders started to factor that into their pricing and it’s another reminder why borrowers need to lock into rates while they can rather than delay and wait for more cuts.”
Harry Goodliffe, Director at Winchester-based HTG Mortgages, said: “Rates moved because swap rates spiked when trouble flared in the Middle East, and lenders reacted fast, wiping out July’s cut in one go.
“But that average rate isn’t the whole picture. Choice has grown for four months running, and nine in ten deals pulled are already back on the shelves.
“Anyone who is still on a lender’s SVR (standard variable rate) is paying well over the odds compared to what’s out there. This looks like another swap-rate wobble, not the start of a real climb, so potentially don’t read too much into one month’s numbers.”
Richard Davidson, Mortgage Advisor at onlinemortgageadvisor.co.uk, pointed out that despite the yo-yoing in rates, the market still favours buyers.
He said: “The swings last month tell the real story. At one point in July, Nationwide cut rates while Halifax raised them, almost within a day of each other, both reacting to the same nervy backdrop of Middle East uncertainty.
“None of that changes the bigger picture for buyers, and this is still their market.
“Choice keeps growing, lenders are competing hard for business, and getting a mortgage today is about as smooth a process as I’ve seen in years, so a short term rate rise is no reason to miss out on the long term benefits of owning your own home.”
Tracey Dixon, Owner at Cardiff-based Pure Mortgage and Protection, said “mortgage rates often take the stairs down and the lift back up, and July proved how quickly a few weeks of reductions can be wiped out”.
She continued: “The borrowers likely to feel this most are those with the smallest deposits. A five-year fixed rate above 6% at 95% loan-to-value could be the difference between a first-time buyer passing or failing affordability, despite having done the hard work of saving a deposit.
“Although the number of available products is encouraging, choice and affordability are not the same thing. With deals lasting an average of only 11 days, borrowers need to be organised and ready to move when the right mortgage becomes available.”
Stephen Perkins, Managing Director at Yellow Brick Mortgages, also urged anyone waiting to lock into a mortgage to do so now.
He added: “For borrowers, this latest data is a reminder that mortgage pricing can change quickly. Waiting in the hope of securing a slightly lower rate can sometimes have the opposite effect if market conditions move against you. We refer to that as the ‘waiting penalty’.”
Jamie Elvin, Director at London-based Strive Mortgages, said “July’s increase is a reminder that mortgage rates rarely move in a straight line”.
He added: “The bigger issue for borrowers is how fast the market is moving, with the average deal now lasting just 11 days. Anyone buying or remortgaging needs to be ready to act rather than assuming today’s rate will still be available in a few weeks.
“There are positives, too. Product choice has risen for four consecutive months and 90% of deals withdrawn in the spring have returned.
“With the average SVR still at 7.13%, there remains a strong incentive for borrowers approaching the end of a deal to review their options early.”
