The Bank of England’s Financial Policy Committee has warned that 5.2 million borrowers – 58 percent of UK mortgagors – could face higher mortgage repayments by late 2028, with the Middle East conflict pushing an additional 1.3 million households into the pressure zone. The FPC’s April 2026 record, published yesterday, reveals the scale of the mortgage market disruption caused by rising swap rates since the Iran conflict began. Before the war, approximately 3.9 million borrowers were expected to see payment increases – that figure has now jumped by a third.
Mortgage products fall by 1,500 as rates climb
The committee noted that the total number of mortgage products on offer has dropped from around 8,500 to 7,000 since the conflict began. Average two-year fixed residential mortgage rates have climbed to 5.84 percent, up from 4.83 percent at the start of March – a full percentage point increase in just one month. This follows Landlord Knowledge’s March report on BTL rates hitting two-year highs, with 1,300 products withdrawn in a single week. The latest figures suggest the withdrawal pace has now reached 1,500 products since the conflict’s start. For buy-to-let landlords, the picture is similar. Specialist BTL lenders have mirrored residential pricing moves, with average five-year fixed BTL rates now exceeding 6 percent for the first time since late 2024.
FPC maintains banks can weather the storm
Despite the mortgage market turmoil, the FPC maintained that UK banks remain “appropriately capitalised” and have the capacity to support households and businesses even if conditions worsen substantially. The committee said: “The conflict in the Middle East has resulted in a substantial negative supply shock to the global economy. The financial system has been resilient so far.” However, it warned that the global environment had become “materially more unpredictable” and urged financial institutions to stress-test for “further sudden and significant price adjustments” – a signal that the committee expects continued volatility. Richard Pinch, senior director of risk at Broadstone, said: “The Bank of England’s latest FPC report highlights how the current conflict in Iran is driving heightened risks to financial stability. While the UK banking system remains resilient, the concern is clearly shifting towards higher borrowing costs, pressure on household finances and potential stress in debt markets.” The FPC record also noted that Bank of England Governor Andrew Bailey had pushed back against market expectations of rate hikes, telling Reuters that traders may be “getting ahead of themselves” in pricing in increases.
What this means for landlords
- If your BTL fix is ending soon: Lock in rates quickly as further withdrawals and repricing are likely – shelf life on current deals is shrinking
- Watch for: Stress-testing requirements may tighten if conditions worsen, potentially affecting remortgage affordability calculations
- Limited company landlords: Corporate BTL rates typically track higher than residential – budget for rates above 6 percent into 2027
- Bottom line: The 1.3 million additional affected borrowers demonstrates how fast conditions can shift – plan refinancing well ahead of fix expiry
Editor’s view
The FPC’s warning should focus minds. A million extra households facing higher bills is not a rounding error – it represents a meaningful shift in the outlook for debt servicing across the economy. For landlords on variable rates or approaching remortgage, the window for action is narrowing. The committee’s confidence in bank resilience offers some comfort, but individual borrowers still face the reality of rates that have climbed a full percentage point in a month.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 2 April 2026
Sources: Bank of England Financial Policy Committee, Moneyfacts, Broadstone
Related reading: BTL rates hit highest level in two years as 1,300 mortgage products pulled
