Mortgage rates rise as Middle East conflict causes inflationary concerns

As the war in the Middle East continues into its second week, its impact on gas and oil prices, which surged to a six-year high, is starting to be felt in mortgage rates. Referring to the conflict, the Prime Minister, Keir Starmer, said, “the longer this goes on, the more likely the potential for an impact on our economy”. As economists lowered expectations for Bank of England base rate cuts and swap rates rose to reflect increasing borrowing costs between banks, some lenders have announced upward adjustments to mortgage deals, with others poised to do the same over the coming days.

Why are mortgage rates rising?

Lenders are likely to be concerned that expected cuts to the Bank of England's base rate will be hampered if inflation rises due to spiking fuel costs. The conflict in the Middle East is causing fuel supply issues and creating price hikes as a result. The Strait of Hormuz, through which a fifth of the world's oil is shipped, was effectively closed as the safety of tankers was compromised. Much uncertainty remains about when the conflict might end, and markets are responding with caution.

The Monetary Policy Committee will next meet on 18 March to review the base rate, with the committee's vote result expected the following day. The possibility that the base rate, which has been falling steadily since the middle of 2024, may even be increased to tackle inflation will also undoubtedly factor into these decisions.

Lenders factor in future expectations to current pricing, and as such, mortgage rates are influenced largely by what the Bank of England sets as its base rate of interest and how it is expected to change over time. The Bank of England uses the base rate of interest to steer inflation towards its 2% target. Having made significant progress since the summer of 2024, the conflict in the Middle East has the potential to derail this if rising oil prices cause domestic inflation to rise.

Coming into 2026, the mortgage markets reflected rates that were gradually reducing based on cautious but optimistic expectations that the Bank of England would cut the base rate of interest at least twice this year. The expectation based on current affairs is that not only will there be no interest rate cut this year, but that we could see the Bank of England raise the base rate to dampen inflationary pressures. You can read more about the current projections for the base rate in our article, “Will interest rates continue to fall in 2026 & how low will they go?”.

Which lenders have increased rates and will others follow?

On Friday 6 March, as we saw the conflict reach the end of its first week, the first mortgage rate hikes started to appear. HSBC, Nationwide and Virgin Money all raised rates across many mortgage deals, affecting both homebuyers and those looking to remortgage.

Among the many rate adjustments, Nationwide increased its 2-year fixed deals for 60% and 80% loan-to-value (LTV) from 3.59% to 3.84% and 3.78% to 4.03%, respectively. NatWest followed suit on Saturday 6 March and Coventry Building Society on Monday 9 March. At the time of writing, Barclays, Halifax, TSB Bank and Accord Mortgages have announced rate increases, with Santander poised to do the same on 11 March. Barclays, which offered one of the best rates for an 80% LTV 2-year fixed deal at 3.77%, has increased this to 3.87%. You will find the best mortgage deals listed in our regularly updated article, “Best mortgage rates in the UK”.

How will rate rises impact borrowers?

Increasing mortgage rates will be more than a disappointment for homebuyers as rates had been steadily falling and many may have been holding out for mortgages to become more affordable. Borrowers with existing mortgage deals that are due to expire will also be impacted as lenders have increased remortgage rates alongside purchase deals. If fuel costs continue to rise, the impact to household expenditure combined with higher mortgage rates could also present challenges for borrowers who are on the cusp of meeting affordability measures with their lender.

If you have a mortgage and your fixed deal is not due to expire within the next six to twelve months, your rate will not change and you are likely to be unaffected unless rate increases persist. Borrowers with tracker rate mortgage deals, however, may experience changes to their monthly repayments if the Bank of England decides to increase the base rate in the future.

Mortgage applications are likely to be protected as long as your application has been approved even if you have not completed the purchase of your property, but you should contact your mortgage lender or broker to ensure that this is the case. Likewise, homeowners who have locked in a new remortgage deal ahead of their current deal expiring should be unaffected by rate changes but should check nonetheless.

Action you should take if you are affected

Understanding your options is key to taking control of your finances, and as such, it will be important to establish whether and when you need to take action. As described above, action will be needed if you have not secured a rate with your lender for the purchase of a property or to remortgage a deal that is due to expire. If you are a remortgaging customer, you can usually secure a new rate up to six months with a new lender before your current deal expires.

Although taking out a new deal with your current lender (known as a product transfer) may be simpler, it is wise to shop around the market for the best rates before locking in as there is no guarantee that your existing lender will offer the lowest rate in the market.

A product transfer with your existing lender (rather than a remortgage to a new lender) usually does not require an affordability assessment or for you to provide evidence of your income. You can lock-in a new rate with your current lender before your existing deal expires. Importantly, locking in a rate ahead of your mortgage deal expiry does not prevent you from switching to a better rate if one becomes available, but it can go a long way towards protecting you from rising rates if you choose not to lock in early. The window in which you can secure a product transfer ahead of the end of your current deal varies by lender and is usually around 4 months in advance. We provide a full roundup of the Mortgage product transfer windows for each lender.

Not all lenders have announced rate increases in recent days so it may be time to go back and search the market for the best mortgage rates based on your circumstances using our mortgage rate comparison tool. It will show you the best interest rates provided by over 90 lenders after searching thousands of mortgage deals.

Often, the best mortgage rates are offered conditionally and you will need to ensure that you meet the qualifying criteria to secure these. It is best to engage with a qualified independent mortgage broker to assist with this process as brokers can quickly match your personal financial circumstances with the best mortgage deals available to you. Your mortgage broker can then ensure that your application is submitted quickly and processed to secure the rates on offer.

If you do not have a mortgage broker, you can source one in your local area using the online financial professionals' directory, Vouchedfor* where mortgage brokers are listed according to their specialisms. Alternatively, you can access free mortgage advice through the online mortgage broker, Habito* where the brokers provide guidance and support online and over the phone. They can search around 90 lenders’ mortgage deals to find the best to suit your needs.

If a link has an * beside it this means that it is an affiliated link. If you go via the link, Money to the Masses may receive a small fee which helps keep Money to the Masses free to use. The following link can be used if you do not wish to help Money to the Masses or take advantage of any exclusive offers: Habito, Vouchedfor