📌 THIS WEEK IN BRIEF:

We have an unusual situation this week, and it is worth understanding clearly because it affects any decision you are about to make.

Mortgage rates are the lowest they have been since March

Fixed mortgage rates fell at their fastest monthly pace since October 2024. During June, the average 2-year fixed rate fell by 0.16 percentage points and the average 5-year fixed rate fell by 0.11 percentage points, with both averages now sitting at 5.52%, their lowest level since March 2026. A mini price war has broken out among lenders responding to the easing of swap rates seen through late June and early July. Product choice has improved for a third consecutive month, rising to 7,177 deals.

That is genuinely good news, and if you have a decision to make it is worth acting on. But it comes with a warning attached, because the thing that drives those rates has just turned.

The conflict has flared again

The interim peace deal signed on 18 June has not held. This week brought another round of US strikes against Iran and the reinstatement of a naval blockade targeting Iranian ports near the Strait of Hormuz. US forces struck dozens of military assets along Iran's coastline during a seven-hour operation, and President Trump pledged to intensify operations until Iran halts attacks on vessels and reopens the waterway. Brent crude, which had fallen below $70 at the start of July, surged back above $86 earlier this week before settling around $79.

The transmission from oil to your mortgage runs the same way it always has. Higher oil pushes up inflation expectations. Higher inflation expectations push up gilt yields. Higher gilt yields push up the swap rates that price fixed-rate mortgages. The reason mortgage rates are still falling this week despite the flare-up is timing. Lenders price fixed products off swap rates with a lag, and the cuts landing now were set in motion by the easing of late June, before this week's escalation. That lag works in both directions. If oil stays elevated and gilt yields climb, the rate cuts we are enjoying now could be among the last of this cycle.

Moneyfacts finance expert Rachel Springall warned this week that borrowers would welcome falling fixed rates but that renewed geopolitical escalation could slow the tempo of further cuts. That is the honest position. Rates are good today. The direction of the underlying market is now less certain than it was a fortnight ago.

What we would do

If your fixed rate ends within six months, this is a strong moment to lock in. Most lenders let you reserve a rate up to six months ahead of completion and switch down if rates fall further before you complete, but not up if they rise. That asymmetry favours acting now, while the price war is live and before any repricing driven by this week's escalation feeds through.

If you are a first-time buyer: House prices are firming, not falling. Nationwide's June data shows annual growth up to 2.2%. You have not missed a crash, and waiting for one is a weak strategy in current conditions. The bigger variable is your mortgage rate, and at 5.52% on a 2-year fix, pricing is the best it has been since March. If you have an offer, the case for proceeding rather than holding out has strengthened.

If you are remortgaging in the next six months: Lock in now. The 5.52% average reflects late June's cheaper funding, not this week's oil spike. Reserve a rate, keep the option to switch down, and protect yourself against the repricing that would follow if the conflict keeps escalating.

If you are a landlord: Buy-to-let rates move further and faster than residential when swap rates turn. If you have a portfolio refinancing in Q4, model it at 6% rather than today's 5.52%. Markets are still pricing a possible rate rise as early as October or November, and Q4 is the window most exposed if that materialises.

House prices are strengthening across the indices

The direction has turned modestly positive. Nationwide's June index shows the average UK house price at £277,484, with annual growth accelerating to 2.2% from 1.7% in May. The Land Registry's most recent data puts the average at £270,080 as of April, up 0.7% on the month. The Lloyds index, formerly Halifax, showed a 0.2% monthly rise in June, the first increase in four months. The picture is one of a market that is stabilising and firming rather than booming, supported by the falling mortgage rates of recent weeks.

Inflation and the rate outlook

The most recent confirmed CPI reading is 2.8% for May, unchanged from April. The June figure publishes on 22 July, after this edition. Services inflation, the measure the Bank watches most closely, was 3.7% in May. The Bank held the base rate at 3.75% on 18 June in a 7-2 vote, with two members voting to raise to 4%. Markets are pricing the possibility of a rate rise as early as October or November if the conflict keeps energy prices elevated. The next decision is 30 July, and it carries a new Monetary Policy Report.

The fiscal question and the new Chancellor

The political transition adds a layer of uncertainty. Rachel Reeves is being replaced as Chancellor as Andy Burnham prepares to take over as Prime Minister. Burnham has committed to the existing fiscal rules, which reassured the gilt market and helped yields fall to two-month lows earlier this month. But the identity of the next Chancellor is the bigger test for bond markets ahead of the autumn Budget. May's fiscal deficit data came in at £23.9 billion, a 30% jump year over year and £5.6 billion above estimates, a reminder that debt affordability remains a live problem. Higher gilt yields feed directly into mortgage pricing, so anyone with a mortgage decision should watch the Chancellor appointment and the autumn Budget closely.

Our ongoing investigation into the £173bn question: how private credit stress reaches your street.

This week: The Bank of England's July Financial Stability Report, published last week on 7 July, concluded that vulnerabilities in private credit and equity markets persist and in some cases have intensified since December, driven by a significant rise in equity market leverage. It also flagged frontier AI as a growing financial stability risk for the first time.

The chain, restated: Non-bank lenders hold roughly 45% of UK development finance. If that funding tightens, fewer schemes get built. Fewer schemes means constrained housing supply. Constrained supply supports prices even as demand weakens, which is why this market has been stickier than pure demand analysis would predict.

The number that matters: UK banks hold an estimated £173 billion of banking book exposure to private market funds and to highly leveraged, sponsor-backed corporates, equivalent to 8% of their total committed wholesale limits.

What we are watching next: Interim Round 1 findings from the Bank's System Wide Exploratory Scenario, covering 46 firms, due later in 2026. The final report lands in 2027.

Case file: Market Financial Solutions. £2bn extended. £930m collateral shortfall. Barclays, Santander, Jefferies and Apollo-linked funds exposed. This is what the theory looks like when it becomes real.

What is happening: This has been a volatile week. Brent crude surged above $86 earlier in the week on renewed US strikes against Iran and a naval blockade near the Strait of Hormuz, before settling back around $79. UK gilt yields retreated from two-month highs as the picture shifted day to day. The market is caught between the disinflationary pull of the June easing and the inflationary push of a re-escalating conflict.

Why it matters for mortgages: Despite the oil spike, average fixed rates fell to 5.52% this week, their lowest since March, because lenders are still passing through late June's cheaper funding on a lag. That lag is the key thing to understand. The cheap deals on the shelf today were priced off funding costs from before this week's escalation. If oil stays high and gilt yields climb, the next repricing is more likely to be upward. Moneyfacts has explicitly warned that renewed geopolitical escalation could slow the pace of further cuts.

What to watch: The durability of any Strait of Hormuz resolution, the 30 July BoE decision and its new Monetary Policy Report, the June CPI figure on 22 July, and the identity of the new Chancellor. Any one of these could move swap rates and therefore fixed mortgage pricing.

Data: Moneyfacts, 13 July 2026

Product choice has improved for a third consecutive month to 7,177 deals, though that remains 307 fewer than the 7,484 available on 1 March before lenders began withdrawing deals. Around 1.8 million fixed rate mortgages are due to expire in 2026, according to UK Finance.

Moneyfacts calculates the real cost of the conflict for a typical borrower. On a £250,000 mortgage over 25 years:

That is an increase of nearly £300 a month, or about £3,380 a year, driven entirely by the rise in mortgage rates since the conflict began. And that is for someone who remortgages onto a current fixed deal. Anyone who does nothing and rolls onto their lender's standard variable rate, which averages 7.13%, pays more still. Doing nothing is the single most expensive move available to a UK mortgage holder right now.

Source: Moneyfacts, July 2026. Illustrative only. Your own figure depends on loan size, term, LTV and lender. Model yours below. Not financial advice.

The West Midlands sits close to the middle of the national table on both price and growth, which makes it a useful barometer for the health of the wider English market outside the strongest northern regions and the weaker southern ones.

According to the Land Registry April 2026 data, the West Midlands recorded solid annual growth broadly in line with the England average of around 3.9%, with the region anchored by Birmingham, the UK's second city. Average prices in the region remain below the national average, which has helped preserve affordability and kept transaction activity steadier than in London and the South East. Birmingham's ongoing regeneration, its young population and its role as a growing hub for financial and professional services relocating out of London have all supported demand.

What is driving it

The West Midlands benefits from the same affordability advantage seen across the Midlands and the North. Lower average prices mean the monthly payment shock from elevated mortgage rates is smaller than in southern markets, keeping more buyers active. Coventry and Wolverhampton offer entry points below the regional average, while Birmingham's city centre commands a premium supported by regeneration and transport investment including the ongoing effects of HS2 construction on connectivity.

A note of caution

Like other Midlands and northern regions, the West Midlands carries meaningful exposure to manufacturing employment. The June PMI showed manufacturing output at a 21-month high, but S&P Global flagged that the boost looks temporary as new order growth slows. If manufacturing weakens through the second half of 2026, regions with a heavier industrial base could feel it in their labour markets, and buyer confidence with it.

Next edition spotlight: East of England.

There is an unusual gap in the market this week. Fixed mortgage rates are the lowest since March, at 5.52% on average, while the underlying market that sets them, gilt and swap rates, has turned volatile on the back of renewed conflict.

This gap exists because lenders price fixed products off swap rates with a lag of days to weeks. The cuts landing now reflect the easing of late June. They do not yet reflect this week's oil spike.

What this means practically: if you are remortgaging or buying in the next six months, the case for locking in now is strong. Most lenders let you reserve a rate up to six months ahead of completion, and many let you switch down if rates fall further before you complete, but not up if they rise. If the conflict de-escalates and oil retreats, you lose nothing by having locked in, because you can move to a lower rate. If the conflict escalates and gilt yields climb, you have protected yourself from the repricing that follows. The downside of waiting has grown this week. The downside of acting has not.

Edition 18 (9 July), we said: "The fixed-rate cuts landing this week may be the tail end of the easing cycle, not the start of a new one."

What happened: Partly right, partly premature. Rates actually fell further this week, to 5.52%, so the easing cycle was not quite done. But the logic held: the conflict re-escalated exactly as flagged, oil spiked above $86, and Moneyfacts is now warning that further cuts could slow. The direction of the call was correct even if the timing was a week early. The lesson: lag effects are real and the last few cuts can arrive even after the fundamentals turn.

Send your questions to [email protected]

This week: "House prices are going up and mortgage rates are coming down. Is this the bottom of the market? Should I buy now?"

Our answer: The data does suggest the market is firming. Nationwide's annual growth rose to 2.2% in June, the Lloyds index posted its first monthly rise in four months, and mortgage rates are at their lowest since March. Taken together, that points to stabilisation rather than a market still falling.

But calling a bottom is a different claim from observing that conditions have improved, and the honest answer is that nobody can call the bottom with confidence right now. Here is why. The single biggest variable is the conflict, and it re-escalated this week. Brent spiked above $86, the US resumed strikes, and the Strait of Hormuz is contested again. If that continues, inflation pressure rises, gilt yields climb, and mortgage rates could reverse. The improving picture of the last month rests on an assumption of de-escalation that this week challenged.

So the practical answer is this. If you are buying a home to live in for years, short-term timing matters far less than getting a rate you can afford and a property you want. Today's rates are the best since March, which is a reasonable entry point. If you are buying as an investment and depending on short-term price movement, the uncertainty is currently high and the case for waiting until the conflict picture clears is stronger.

Whatever you do, stress-test your affordability at 6% and above, not just at today's 5.52%, because the market has shown this year how fast rates can move.

Educational purposes only. Not financial advice. Always consult an FCA-regulated mortgage broker.

1. Fixed Mortgage Rates Fall to Lowest Since March at 5.52% Average fixed rates fell at their fastest monthly pace since October 2024. During June the average 2-year fix fell 0.16 percentage points and the 5-year fix fell 0.11 points, with both now at 5.52%, their lowest since March 2026. Product choice rose for a third consecutive month to 7,177 deals. Moneyfacts warned that renewed geopolitical escalation could slow the pace of further cuts. Source: Moneyfacts UK Mortgage Trends, HomeOwners Alliance, 13-14 July 2026

2. Conflict Re-Escalates: Brent Spikes Above $86 on Renewed US Strikes and Hormuz Blockade Brent crude surged above $86 earlier this week before settling near $79, after another round of US strikes against Iran and the reinstatement of a naval blockade near the Strait of Hormuz. US forces struck dozens of military assets in a seven-hour operation, and President Trump pledged to intensify action until Iran halts attacks on vessels. UK gilt yields were volatile, retreating from two-month highs. Source: Trading Economics, Oilprice.com, 14-15 July 2026

3. Nationwide: Annual House Price Growth Picks Up to 2.2% in June Nationwide's June House Price Index showed the average UK house price at £277,484, with annual growth accelerating to 2.2% from 1.7% in May, though prices were broadly flat month on month after seasonal adjustment. The reading adds to signs that the market is firming, alongside the Lloyds index posting its first monthly rise in four months. Source: Nationwide House Price Index, June 2026

Fixed rates have fallen to 5.52%, but the conflict has flared again and the direction is uncertain. Before you make any decision, model your current payments and what a rate movement of 0.25% or 0.5% in either direction would mean for your monthly budget.

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UK Property Pulse sends every Thursday at 7:30am. Subscribe: ukpropertypulse.co.uk/subscribe Contact: [email protected] UK Property Pulse is not authorised or regulated by the FCA. Nothing in this newsletter constitutes financial advice. Always consult a qualified, FCA-regulated mortgage broker before making mortgage decisions.

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