Today’s UK Finance Digest
Mortgage pricing, business confidence and the wider housing market are all being shaped by renewed economic and geopolitical uncertainty. Here are the key developments affecting borrowers, businesses and property professionals today.
Mortgage rates continue to rise
More than 30 UK mortgage lenders have increased their rates in recent weeks as the conflict involving Iran fuels concerns about oil prices and inflation. According to Moneyfacts, the average new mortgage rate has risen from 5.43% to 5.59%. That 0.16 percentage-point increase would add approximately £230 a year to the repayments on a £200,000 mortgage taken over 25 years.
Although the Bank of England held Bank Rate at 3.75%, the increasingly divided vote among policymakers has reinforced expectations that the next move could be upwards rather than downwards. Unless inflation risks ease, borrowers should not assume that cheaper mortgage deals are imminent.
Source: The Standard, citing Moneyfacts.
Small-business growth expectations hit a 12-year low
Only 24% of UK small businesses now expect to grow during the next three months—the lowest level recorded by Novuna’s Business Barometer since the research began in 2014, excluding the first Covid lockdown. The construction sector recorded the sharpest deterioration, with just 15% of businesses forecasting growth, down from 29% during the previous quarter. Expectations also fell significantly across retail, hospitality, finance and media.
Geopolitical instability, fuel costs and domestic political uncertainty are making it increasingly difficult for smaller firms to plan, invest and recruit with confidence.
Source: Novuna Business Finance, Business Barometer, July 2026.
Housing transactions show signs of resilience
An estimated 98,700 seasonally adjusted residential property transactions completed across the UK in June—2% more than during June 2025 and marginally more than in May. Before seasonal adjustment, 103,050 transactions were recorded, representing the strongest June performance since 2022.
The increase suggests that underlying housing activity has improved. However, transaction figures are backward-looking and largely reflect decisions made before the latest mortgage-rate increases, so they may not yet capture the effect of renewed borrowing-cost pressures.
Sources: HM Revenue & Customs and Mortgage Solutions.
Equity-release activity returns to growth
Older homeowners are increasingly turning to housing wealth as part of their retirement planning. Equity-release lending reached £597 million during the second quarter of 2026, up 4% from the previous quarter. Overall customer numbers also increased by 4% to 13,489, while the number of new customers rose by 9% to 5,307.
Equity release can provide access to capital without requiring the homeowner to move, but lifetime mortgages accumulate interest and can significantly reduce the value of an estate. Independent advice and a clear understanding of the long-term cost remain essential.
Sources: Equity Release Council and Daily Mail.
Hormuz disruption could push the UK towards recession
EY has raised its central UK growth forecast for 2026 to 0.9%, but that outlook depends heavily on the Strait of Hormuz reopening and allowing oil, gas and other essential goods to move through the Gulf. Under a prolonged-disruption scenario, EY estimates that UK growth could slow to 0.5% this year before the economy contracts by 0.2% in 2027. Inflation, currently expected to approach 3.5% by the end of 2026, could instead climb as high as 6.4%.
The figures underline how quickly disruption to global energy markets can affect UK inflation, interest-rate expectations, household spending and business investment.
Source: City AM, reporting EY’s UK economic outlook.
New rental-home construction falls sharply
Only 3,455 build-to-rent homes started construction during the 12 months to the second quarter of 2026—a 79% annual decline and 80% below the average recorded between 2017 and 2019. The slowdown was particularly severe outside London, where starts fell by 84%, from 13,893 to 2,176.
Viability pressures, construction costs and uncertainty around rental and property policy are discouraging investment in new developments, even though demand for rented homes remains strong. Continued weakness in the development pipeline could place additional pressure on rental supply and affordability in future years.
Sources: Real Estate and Savills, reported by The Sunday Telegraph.
The wider picture
The UK property market is still moving, but the environment has become more difficult to read. Existing transactions remain relatively resilient, while rising mortgage rates, weak business expectations and a sharp slowdown in new housing development point to greater pressure ahead.
For borrowers and businesses, early planning, realistic affordability assessments and access to a broad range of funding options are becoming increasingly important.
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