UK Mortgage Rates Jump, and Petrol Prices Rise, Amid ‘Trumpflation’ Worries; Oil Price Falls as Bessent Says US Is Letting Iran Ship Its Crude – as It Happened

Why It Matters

Higher mortgage rates increase borrowing costs for UK homeowners, threatening housing affordability, while rising fuel prices squeeze household budgets. The dip in oil prices and supportive fiscal measures provide limited relief but underscore the volatility tied to Middle‑East geopolitics.

Key Takeaways

• UK 2‑yr mortgage rate hits 5.20%, up 0.1%.
• 5‑yr fixed mortgages rise to 5.25% amid rate‑cut doubts.
• Petrol climbs to 141.74p/litre, diesel to 161.20p/litre.
• Brent crude slips below $102 as US eases Iran sanctions.
• Government allocates £53 m heating‑oil aid for vulnerable households.

Pulse Analysis

Mortgage rates in the United Kingdom nudged higher this week, driven by market consensus that the Bank of England will maintain a restrictive stance through 2027. The two‑year fixed rate now sits at 5.20% and the five‑year at 5.25%, eroding affordability for new borrowers and prompting refinancers to lock in before further hikes. Analysts remain split on the likelihood of any rate cuts this year, with Goldman Sachs still forecasting two reductions, while the broader housing market grapples with a shrinking pool of available mortgages.

At the consumer level, fuel costs surged again, with the RAC reporting petrol at 141.74p per litre and diesel at 161.20p per litre. The price spikes add pressure to household budgets already strained by higher mortgage payments, prompting the UK government to announce a £53 million heating‑oil relief scheme for vulnerable families. Chancellor Rachel Reeves has also urged the Competition and Markets Authority to clamp down on perceived price‑gouging, yet analysts expect further incremental rises as wholesale fuel prices stay elevated.

Oil markets, however, showed a modest retreat after US Treasury Secretary Scott Bessent signaled tolerance for Iranian crude shipments through the Strait of Hormuz. Brent slipped below $102 a barrel and US crude fell to $95, easing inflationary concerns and contributing to a drop in gilt yields. The Bank for International Settlements cautioned central banks to look through the temporary supply shock, while equity markets responded positively, with technology and energy stocks leading gains. This interplay of geopolitical easing, fiscal support, and monetary expectations highlights the delicate balance shaping UK inflation and growth outlooks.