According to data from financial services provider Moneyfacts, as the Iran crisis raises energy prices and borrowing costs in the UK, British banks withdrew the most mortgage products from the market on Monday since the mini-budget crisis of 2022.

Lenders pulled 308 home loan products from the market on March 9; this figure is quite low compared to the 935 products on September 27, 2022, when the then-Prime Minister Liz Truss’s new government announced major tax cuts funded by borrowing.

The recent turmoil in the UK mortgage market, where prices have fallen in recent weeks, shows the far-reaching consequences of the conflict in Iran; as this situation raises yields in the UK government bond and swap markets on which mortgage prices are based.

According to Moneyfacts’ statement, the single-day drop in the market on Monday was the largest since the record day in 2022; the only exception was the simplification of products by a single specialist credit institution on July 23, 2024.

Adam French, head of consumer finance at Moneyfacts, said the turmoil in the mortgage market this week was “a sharp and sudden adjustment by many lenders in response to rapidly rising swap rates.”

French noted that some of these products could return as credit institutions adjust to higher interest rate expectations, but this development would still harshly impact borrowers, and interest rate increases would now depend on how global markets and inflation react to the Iran crisis.

Nicholas Mendes, a mortgage technical manager at John Charcol, said: “We are likely to see another wave of lenders withdrawing or repricing their deals in the coming days, including those who increased rates last week.”