UK and US Mortgage Rates Climb Amid Middle East Conflict

Fixed-rate mortgages in the United Kingdom and United States rose during the week of July 14, 2026, reversing recent downward trends. In the UK, the average two-year fixed rate increased to 5.48% and the five-year rate climbed to 5.50% by Thursday morning. David Hollingworth of L&C Mortgages attributed the shift to higher funding costs for lenders caused by the resumption of hostilities in the Middle East.

In the United States, the average 30-year fixed-rate mortgage reached 6.55%, the highest level in nearly a year, while the 15-year rate rose to 5.93%. These increases follow a climb in 10-year Treasury yields, driven by renewed fighting in the Iran conflict which spiked crude oil prices and inflation expectations. Despite a 0.4% decline in recent Consumer Price Index data, Zillow Home Loans adjusted its forecast, predicting the 30-year rate will only gradually ease to 6.4% by the end of 2026.

The rising costs have significantly impacted consumer behavior. The Mortgage Bankers Association reported a 7% weekly decline in applications, with Bob Broeksmit noting that the rate increases continue to dampen borrower demand.