Iran war may increase mortgage payments for extra 1.3m UK households, says Bank of England

The Bank of England says the US-Israel war on Iran has become a “substantial negative supply shock” to the global economy, with the conflict already feeding into tighter financial conditions in the UK. Average two-year fixed mortgage rates have risen to 5.84% from 4.83% at the start of March, while banks have pulled around 1,500 mortgage products and raised rates on many of the 7,000 remaining offers. For precious metals, the main takeaway is a higher-volatility macro backdrop rather than a direct market headline. The FPC warned of “large, frequent and possibly overlapping shocks,” cited pressure on sovereign bond markets, and highlighted disorderly-unwind risk from hedge fund positioning in government debt — all factors that tend to support safe-haven demand for gold on stress episodes, while also complicating the rate path. Near term, the key catalyst is whether the conflict persists long enough to worsen growth expectations and keep policy uncertainty elevated. The BoE said financial markets now expect two rate hikes this year, which is a potential headwind for non-yielding gold if realized, but any escalation in geopolitical risk or renewed bond-market stress would likely keep bullion supported on dips.