7th March 2026
Several UK lenders have already raised mortgage rates, and inflation fears linked to the Middle East conflict are a major part of the story.
The pattern is clear: when markets expect inflation to stay higher for longer, the cost of funding mortgages rises, and lenders pass that on through higher fixed‑rate deals.
What lenders are doing right now
Multiple major lenders have increased rates in the past few days:
Nationwide has raised selected fixed rates by up to 0.25%, affecting first‑time buyers, movers, remortgages, and additional borrowing.
Virgin Money has also increased rates by up to 0.25% across purchase, remortgage, and product‑transfer deals.
NatWest is raising rates by up to 0.16% across a wide range of products, including first‑time buyer, shared equity, green mortgages, and buy‑to‑let.
These increases are directly linked to higher swap rates, which are the financial instruments lenders use to price fixed‑rate mortgages. Swap rates have risen because markets are nervous about inflation staying elevated due to the Middle East conflict and the disruption to oil and shipping.
Why inflation fears are pushing mortgage rates up
The conflict has created:
Higher oil prices, which feed into energy costs and inflation expectations.
Shipping disruption, especially around the Strait of Hormuz, raising transport and import costs.
Market uncertainty, which pushes up the cost of long‑term borrowing.
Economists now warn that UK interest rates may stay higher for longer — or even rise again — because the conflict has shifted the inflation outlook.
When markets think inflation will be sticky, swap rates rise. When swap rates rise, lenders increase mortgage rates.
How this fits into the wider 2026 mortgage outlook
The broader trend had been towards gradual stability after the sharp rises of 2022-2024. The Bank of England base rate had fallen to 3.75% by early 2026, and markets were expecting further cuts.
But the Middle East crisis has changed expectations:
Markets now price in fewer cuts.
Some analysts warn rates could rise above 4% again if inflation worsens.
This is why lenders are adjusting fixed‑rate pricing upward even though the base rate hasn't changed.
What this means if you're thinking about a mortgage
You're likely to see:
Higher fixed‑rate deals in the short term
More volatility as markets react to geopolitical news
Lenders repricing quickly — sometimes daily — when swap rates move
If inflation fears ease, rates could stabilise again. But if oil prices or shipping disruption worsen, further increases are likely.
Note
Oil prices on 6 March passed $90 a barrel and speculation of even higher prices to come.