Mortgage costs are rising and homeowners who need to renew a fixed rate deal should move quickly, experts have warned.

The Bank of England is likely to hold rates when its Monetary Policy Committee meets on Thursday, rather than cut them as had been widely anticipated before the Middle East crisis.

That means further pressure on mortgage deals as the best offers get pulled from the market. The so-called “swap rates”, which reflect the markets view of which way borrowing costs will go, are on the rise.

Since the outbreak of the Iran war, mortgages at less than 4 per cent, common not so long ago, have met a rapid demise.

Elliot Nathan, partner at mortgage broker Eddge, says: “As of today, its easier to name which banks haven’t increased rates in the past few days.

“I suspect with the uncertainty we shall continue to see SWAPs rise which in turn will lead to lenders making further increases. I would strongly recommend anyone thinking of securing a fixed rate for a remortgage which is due to expire this year, to move quickly.”

None of the big lenders are offering a fixed rate below 4 per cent at the moment.

All of the biggest banks – namely Barclays, HSBC, Lloyds Bank, NatWest and Santander – have increased rates since the start of March. Building societies have done the same. Nationwide rates on some fixed rate deals go up by 0.35% from Tuesday March 17.

While recent mortgage costs are up, they are still better than a year ago, before the Bank of England cut rates. Sadly for the UK, borrowing costs are being driven by world events rather than UK government policy, which may limit what politicians are able to do in mitigation, say brokers.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Borrowers looking for the lowest fixed rates will be disappointed to see the demise of sub-4 per cent mortgages, but they are not sustainable with swap rates increasing.

“Lenders look at margins very carefully, so it would be unwise to price their deals too low, if the expectations are for interest rates to rise, even if over the short-term.”

She added: “The mortgage market needs stability, and really, borrowing costs are lower than in recent years, and we have had sub-4 per cent deals on the shelves for over a year (since February 2025). While many of the biggest lenders no longer offer a sub-4 per cent fixed deal, it is a cautious decision.

“Mortgage rates are rising due to global pressures, not UK fiscal policy, so while not ideal, rate increases are not mirroring the ‘mini-Budget’ fiasco in 2022.”

Peter Stimson, director of mortgages at MQube, said: “Since the start of the Iran war, swaps, which fixed rate mortgage pricing is based off, have risen around 0.60% and all of this has essentially now been passed on to mortgage customers with all the big lenders now having repriced at least twice, in the form of higher mortgage rates.”

This means a first time buyer wishing to take out a 90 per cent LTV mortgage is now paying around 4.65 per cent for a 2-year fixed rate (£999 fee) and around 4.90 per cent for a 5-year deal (£999 fee).

Mr Stimson added: “However, rates are changing rapidly and the longer the war continues the more we can expect rates to continue their upward trajectory. How bad could this get? If this is protracted and we get oil approaching $150 a barrel, we may see yet another interest rate rise being priced into the swap curve by the market and another jump in mortgage rates. Hopefully, there is resolution before then.”

Oil on Tuesday was trading at $103 a barrel.

Dan Coatsworth, head of markets at AJ Bell, said: “The longer the oil price stays above $100 per barrel, the louder the alarm bells for the market over inflation risks. Iran’s continued attacks on regional energy infrastructure are helping to keep crude at elevated levels.”

Some say the issue for mortgage prices is a lack of new housing.

Mary-Lou Press, President of NAEA Propertymark (National Association of Estate Agents), said: “The loss of sub-4 per cent fixed rate mortgages will be disappointing for many buyers, particularly first-time buyers already facing affordability pressures.

“This shift highlights how sensitive mortgage rates are to wider economic uncertainty, making it harder for people to plan and potentially slowing activity across the housing market.

“Even small increases in rates can significantly impact borrowing capacity and monthly costs, reinforcing the need for stability and confidence.”

One day after a famous short-seller said Close Brothers has “systematically misrepresented” the extent of its exposure to the car loan mis-selling scandal, the merchant bank said it would axe 600 jobs as it looks to cut costs.

Yesterday shares in the finance house tumbled 14 per cent on Monday after Viceroy Research, which has previously called out Wirecard and Home Reit, said Close would have to at least double its provision for the scandal, which could end up costing the car loan sector £10 billion, watchdogs estimate.

Close expects to pay £300m for the car saga, which saw the commission paid to sales people not disclosed to consumers.

Lloyds Bank has the biggest exposure of any financial business, with much of the car trade also on the hook. Lloyds could end up paying out £2bn, though it has raised criticisms of how the regulator, the Financial Conduct Authority, is calculating payments.

The FCA said payouts are due on around 14 million unfair car finance deals, averaging at about £700 each, within a 360-page consultation document for its proposed redress scheme published last week.

Shares in Close were up slightly today at 360p.

The firm said the cuts – nearly a quarter of its 2,600-strong workforce – would be made over the next 18 months across its teams in the UK and Ireland.

It comes as part of plans to cut costs by about £25 million in its current year to the end of September, up from a £20 million previous target, and by around another £60 million in the next financial year, which is a year earlier than planned.

The cuts will come from actions including moves to outsource and offshore work, cut back its office network and roll out the use of artificial intelligence (AI) “at pace”.

Chief executive Mike Morgan said: “While the impact on affected colleagues is regrettable, these actions are necessary to structurally lower our cost base, while increasing our agility and ability to serve our customers.”

The note from Viceroy said: “We believe Close Brothers has systematically misrepresented its exposure to the Financial Conduct Authority’s forthcoming motor finance consumer redress scheme.”

Viceroy thinks Close could have to pay out between £572m and £1.23bn to compensate customers in all. At the higher end, that exceeds the entire market value of the company.

Close Brothers said it “strongly disagrees” with Viceroy’s conclusions. It added: “Our provisioning approach in relation to this matter is in accordance with UK-adopted international accounting standards and follows a robust governance process.”

Short-sellers such as Viceroy take a market position against shares, betting they will fall.

Close today which it reported a £65.5m loss for the six months to the end of January. It reported a £102.2m loss for the same period last year.

Additional reporting by PA