Mortgage market records largest drop in deals since mini-budget – banks pull 472 in 2 days | Personal Finance | Finance

The mortgage market has seen the largest drop in deals since Liz Truss’s disastrous mini-budget in 2022, according to new data. Moneyfactscompare said a staggering 472 residential mortgage products were withdrawn from the market in the last 48 hours.

It said this is around 6.5% of the market, which now stands at 7,164. Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: “Recent days have been some of the most turbulent in the UK mortgage market since the aftermath of the September 2022 mini-budget. In the last 48 hours, almost 500 residential mortgage products have been withdrawn as lenders reacted to rapidly rising swap rates.”

However, he pointed out that the scale is “nowhere near” the shock seen in late September 2022 when 935 products, which accounted for more than a quarter of the market at the time, disappeared in a single day.

Mr French said: “Many of these deals are likely to return within the next few days and weeks as lenders adjust their pricing to higher rate expectations.”

Average mortgage rates on the market are also at levels not seen since last summer.

Moneyfacts data show the average two-year fixed homeowner mortgage rate on Wednesday morning was 5.01% – up from 4.84% on Friday and the highest level since it was also 5.01% on August 6, 2025.

The average five-year fixed homeowner mortgage rate was 5.09% – up from 4.96% on Friday and the highest level since June 26 2025, when it was 5.09%.

The overall average Moneyfacts mortgage rate opened on Wednesday morning at 5.04% – up from 4.91% on Friday and the highest level since August 7, 2025, when it was also 5.04%.

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Mr French said: “Moneyfacts average mortgage rates have jumped considerably higher, with the typical two-year fixed rate now at 5.01% for the first time since August 2025 and the average five-year fix surging past 5% to reach 5.09%.

“It’s unwelcome news for borrowers as the prospect of falling mortgage rates has quickly given way to rate rises.

“How far they could go is now heavily dependent on how global markets and inflation expectations evolve as conflict in the Middle East unfolds.”

Markets were sent into turmoil after the US and Israel launched wide-ranging strikes on Iran on February 28.

Iran responded with its own attacks on Israel and US-allied states in the Gulf, forcing the closure of the Strait of Hormuz, which accounts for around 20% of global oil and gas supply.

This has prompted some of the largest oil and gas producers to suspend production, driving oil prices to $120 a barrel on Monday.

However, the price dropped slightly after President Donald Trump said the war with Iran would end “very soon”.

Laura Suter, director of personal finance at AJ Bell, said: “Higher energy and fuel costs rarely stay confined to those sectors alone. Instead, they spread through the wider economy, raising costs for businesses and ultimately pushing up prices for consumers.

“A resurgence in inflation would also have implications for borrowing costs. Before this conflict began, it was widely expected that interest rates would be cut at the next meeting in March, as they had only been marginally held at the last meeting, with five votes to four in favour of maintaining rates at their current 3.75%. However, the market expectation of this rate cut has now plummeted.

“It will be too soon for any impact of the Iran crisis to be seen in inflation figures ahead of the March meeting, but the uncertainty surrounding the crisis and its impact on the UK economy may mean the rate setters at the Bank of England decide to pause their rate cutting until the impact is more certain.

“Where previously markets were pricing in two interest rate cuts this year, the latest market outlook is for no cuts to rates all the way through to April next year. In fact, from early 2027, markets are pricing in a slim chance of an interest rate rise – moving in the opposite direction to what many expected.

“Even without any rises, no interest rate cuts for this year would mean mortgage rates remaining higher for longer than many homeowners had hoped, particularly those coming off fixed-rate deals this year.

“Some mortgage deals have already been withdrawn, as lenders forecast higher interest rates this year than was previously expected. It means anyone up for remortgage in the next six months should lock in a rate now, and they can always revisit it later if interest rates do drop.”