The cost of a typical mortgage has surged by nearly £1,000 a year in the three weeks since the outbreak of war in the Middle East, as rising energy prices and inflation fears push up borrowing costs. The average two-year fixed rate has climbed from 4.83 per cent to 5.35 per cent, while the average five-year fixed rate has risen from 4.95 per cent to 5.39 per cent, adding hundreds of pounds a year to repayments on a £250,000 loan over 25 years.

Markets have shifted dramatically, moving from expectations of interest rate cuts to pricing in possible rate rises next year. Escalating conflict, including attacks on energy infrastructure, has driven oil and gas prices sharply higher, fuelling concerns that inflation will increase and force the Bank of England to raise its base rate.

Analysis suggests mortgage rates typically stabilise around 1.5 percentage points above the base rate, currently 3.75 per cent. If the base rate climbs to 4.25 per cent as predicted, average new mortgage rates could settle near 5.75 per cent, potentially adding between £1,000 and £1,500 a year to borrowing costs compared with levels before the conflict began.