Average mortgage rates have climbed to 5.5 percent, marking the highest level since August 2024 and adding more than £1,000 a year to typical landlord borrowing costs, according to Moneyfacts data released this week.
The increase comes as inflation holds at 3 percent and geopolitical uncertainty continues to weigh on financial markets. For buy-to-let landlords approaching remortgage dates, the figures represent a sharp reversal from expectations at the start of the year, when rate cuts were widely anticipated.
Rate rise accelerates through March
The average mortgage rate has risen from 4.89 percent at the start of March to 5.5 percent by 25 March. On a £250,000 loan over 25 years, this translates to an increase of more than £1,000 in annual repayments.
Adam French, head of consumer finance at Moneyfactscompare, said: “The Moneyfacts Average Mortgage Rate has hit 5.5 percent – heights last seen more than 18 months ago, marking another unwelcome milestone for borrowers this month. These rising costs are in direct response to the conflict in the Middle East which has dramatically shifted market expectations around inflation and future interest rates, with lenders scrambling to keep up with rising funding costs.”
French added: “While a quicker resolution to the conflict in the Middle East could ease pressure on rates, some inflation is already baked in. The reality is that a more volatile world is a more expensive world.”
This follows Landlord Knowledge’s March report on rates breaching 5 percent, when 472 mortgage products were pulled from the market. The latest figures suggest the repricing has intensified rather than stabilised.
Inflation holds steady despite cut expectations
UK inflation remained at 3 percent in February, unchanged from January and well above the Bank of England’s 2 percent target. Economists had expected inflation to begin easing in spring, but rising energy costs linked to conflict in Iran have increased uncertainty around the outlook.
Tom Bill, head of UK residential research at Knight Frank, said: “Almost four weeks into the Middle East conflict, the Bank of England risks fighting its own inflation battle on the wrong front. As oil and natural gas prices have surged, financial markets have bet central banks will need to raise rates to control inflation.”
Bill added that underlying economic conditions differ from the double-digit inflation period of 2022 and 2023, warning that raising rates could be a misstep in current circumstances.
Many economists now expect the Bank of England to increase rates twice this year, a shift from late February when two cuts were priced in by financial markets.
What this means for landlords
- If you are remortgaging in 2026: Expect to pay significantly more than quotes from earlier this year – budget for rates above 5 percent on standard products.
- If your fix ends in the next 6 months: Consider locking in a rate now before further repricing, even if it means paying an early repayment charge.
- Watch for: Further product withdrawals as lenders adjust to volatile swap rates – availability may tighten for higher LTV or complex cases.
- Bottom line: The refinancing wave forecast for 2026 is now arriving into a far more expensive market than anticipated.
Editor’s view
Landlords who waited for rate cuts are now facing the opposite scenario. With geopolitical uncertainty unlikely to resolve quickly, the sensible approach is to plan for higher borrowing costs as the new baseline rather than an exception.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 26 March 2026
Sources: Moneyfacts, Knight Frank
Related reading: Average mortgage rates breach 5% as 472 products pulled
