Adam French, the head of consumer finance at Moneyfacts, said that homeowners coming to the end of five-year fixes would be “squeezed from all sides”.
This is based on fears that households will be paying higher mortgage repayments alongside inflated energy and fuel bills.
Mr French said: “It really is a perfect storm of nasty price increases that’s going to hit households, and it’s going to necessitate a lot of very strict budgeting.”
‘Body-blow’
The Resolution Foundation has already warned that higher fuel prices and rising energy costs will cost middle-income families £480 this year.
There are around 971,000 five-year fixed mortgages set to come to an end this year, according to the Financial Conduct Authority.
David Hollingworth, of broker L&C Mortgages, said the increase in borrowing costs meant homeowners coming off five-year fixed rates are facing “a body blow”.
Mr Hollingworth said: “Borrowers have just got to brace themselves for higher rates than they would have been anticipating.”
Lenders have pulled more than 500 mortgage deals from the market in the wake of the war.
The turmoil has cut the average lifespan of a mortgage product to a record low of eight days in March, according to Moneyfacts.
That is compared to February, when banks kept a mortgage deal on the market for around 14 days.
Market is ‘losing momentum’
Worryingly for prospective buyers and those hoping to secure a new deal, mortgage product availability has shrunk by around 17pc in just one month.
It means the number of mortgage products available has fallen to 6,201 – its lowest level since March 2024.
Before the Iran war broke out, markets had forecast the Bank of England would cut interest rates twice in 2026. However, concerns about inflation mean markets now expect the Bank to raise rates at least once this year.
Ian Futcher, a financial planner at Quilter, said: “Geopolitical risk now feeds into the mortgage pricing very quickly.”
He added that the recent increase in borrowing costs meant the UK’s housing market was “losing momentum”.
Economists at Deutsche Bank have forecast a 3pc-5pc decline in house prices this year.
Sanjay Raja, the chief UK economist at Deutsche Bank, said: “The Iran conflict has likely put an end to any hopes of an imminent housing market recovery.”
It comes amid concerns that higher mortgage rates and a decline in disposable incomes will cause prospective buyers to delay or even halt home purchases this year.
