The conflict in the Middle East is having a ripple effect on the global economy. If you’re looking to buy a home or remortgage in 2026, you might have noticed a sudden shift in the UK mortgage market.
Here’s a breakdown of what’s happening, why it’s affecting interest rates, and what these changes could mean for your current or future mortgage.
What’s happening with mortgage rates?
At the start of 2026, the outlook for mortgages was bright. After several interest rate cuts in 2025, there was a general expectation that borrowing costs would continue to fall.
However, the escalating conflict has caused a turn in the market (data correct as at 13 March 2026):
- Lenders are raising rates: High street banks like HSBC, NatWest, Nationwide, and Barclays have all increased their fixed rate deals by up to 0.25%.
- Deals are being pulled: Hundreds of different mortgages have been withdrawn from the market as lenders react to the uncertainty.
- Rates are crossing the 5% mark: Average two year and five year fixed rates have recently risen above 5% for the first time in months.
Why does a conflict abroad affect my mortgage?
It might feel strange that events thousands of miles away affect the cost of a home in the UK. It mostly comes down to two things: oil and inflation.
The Middle East is a major global supplier of energy. When conflict breaks out, the price of oil and gas often rises. This makes it more expensive for businesses to operate and for us to heat our homes or fill up our cars.
InflationInflation is the rate at which prices rise over time. When inflation goes up, your money doesn’t stretch as far – £1 today buys you a bit less than it did a year ago. usually follows when energy prices go up. The Bank of England may decide to keep interest rates higher for longer to stop the cost of living from rising too quickly and to protect the spending power of your money. Mortgage lenders watch these trends closely and adjust their own prices to get ahead of the curve.
How this affects mortgage rates
When the Bank of England keeps interest rates high, it becomes more expensive for lenders to offer cheap mortgages. To cover their own costs, banks and building societies increase the interest rates on the deals they offer you. Lenders often raise these prices in advance if they expect global uncertainty to push rates even higher in the future.
What does this mean for you?
If you’re a first time buyer
If you’re saving in a Lifetime ISA or have just started home hunting, try not to panic. While rates have edged up, they’re still lower than the peaks seen in recent years.
You might find it helpful to see where you stand sooner rather than later since deals can be repriced quickly. Getting a Mortgage in Principle could help you understand your budget before any further changes happen.
If you’re remortgaging in 2026
Around 1.8 million fixed rate deals are due to end this year. If yours is one of them, you may want to avoid a wait-and-see approach. Most lenders allow you to lock in a new rate up to six months before your current deal ends, which can help provide certainty. It’s also worth noting that if you secure a deal now and rates move in your favour before your current one ends, it’s usually possible to switch to the better rate.
Three steps you can take today:
- Don’t wait for the perfect moment: The market is moving fast. If you find a rate that fits your budget, it might be worth securing it now.
- Checking switch options: Many brokers can lock in a deal for you today. If rates happen to drop again before you actually move or complete, they can often switch you to the cheaper one.
- Using in-app tools: You don’t have to navigate this alone. You can use the tools and calculators in your Moneybox app to see how these changes affect your monthly budget and borrowing power.