UK Mortgage Rates Rise Amid Middle East Concerns

Mortgage rates in the UK are experiencing an upward trend, driven by growing concerns over the potential impact of the conflict in the Middle East on energy prices and inflation. Several major lenders have announced increases to their fixed-rate mortgage offerings in recent days, reversing a previous expectation of rate cuts.

Recent Rate Hikes

NatWest, HSBC, Nationwide, Santander, Coventry Building Society, and the Co-operative Bank have all recently increased their fixed-rate mortgage rates. NatWest announced rate increases across a range of products effective Saturday, March 7, 2026. For example, a remortgage at a 60% loan-to-value ratio on a two-year fix will see rates rise from 4.01% to 4.13%, with no arrangement fee. HSBC increased rates on some fixed-rate deals by 0.25 percentage points, while Skipton raised rates on its two-year fixed deals by 0.16 percentage points.

Swap Rate Influence

The increases in mortgage rates are closely linked to rising swap rates, which lenders use to price fixed-rate mortgage deals. Two-year swap rates have risen to 3.65% as of Friday morning, March 6, 2026, up from 3.33% a week prior, according to Moneyfacts [https://www.moneyfacts.co.uk/].

Shift in Market Sentiment

Mortgage brokers report a significant shift in market sentiment. Adrian Anderson, managing director of Anderson Harris, noted that borrowers who had been anticipating lower rates are now moving to secure fixed-rate deals. Some clients are even switching from tracker loans to fixed-rate mortgages and opting for longer fixed terms, such as five years, to lock in rates amid the uncertainty.

Further Rate Increases Expected

Aaron Strutt, product director at Trinity Financial, anticipates further rate increases in the coming days. Many lenders allow borrowers to lock in new rates three to six months before their current fixed-rate deals expire, prompting brokers to urge borrowers to act quickly to avoid potential cost increases.

House Price Trends

Despite the rising mortgage rates, Halifax reported a 0.3% increase in house prices in February compared to the previous month, continuing a recent trend of gradual price increases. However, analysts caution that this trend may not continue if the conflict in the Middle East persists, potentially leading to fewer interest rate cuts and dampened buyer sentiment. Ashley Webb, UK economist at Capital Economics, suggests that while housing is expected to strengthen this year, a prolonged conflict could temper that growth.

Buyer and Seller Caution

Some estate agents are already observing a degree of caution among buyers and sellers. Jeremy Leaf, an agent in north London, noted that some clients are pausing their decisions due to the uncertainty surrounding interest rates and inflation.

Banking Groups in the UK

Several major banking groups operate in the UK, including Barclays, HSBC, Lloyds Banking Group, NatWest Group, Santander UK, and Virgin Money UK Plc [https://www.choose.co.uk/money/guide/bank-and-building-society-overview/]. Customers should be aware of which banks share licenses to ensure their deposits are fully protected under the Financial Services Compensation Scheme (FSCS).