What's happening?
The UK mortgage market has taken a sharp turn. Just weeks ago, lenders were trimming fixed rates and the outlook was cautiously optimistic. That sentiment has reversed rapidly.
Escalating conflict in the Middle East — specifically US-Israeli airstrikes on Iran — has driven oil prices above $100 a barrel and rattled bond markets globally. UK gilt yields have surged, with the 10-year yield jumping to around 4.72%, its highest level in five months. The weekly rise of over 40 basis points is the largest since September 2022.
This matters directly for mortgage borrowers because fixed rate mortgages are priced off gilt yields and swap rates — not the Bank of England base rate. When gilts and swaps spike, lenders' funding costs jump, and they either raise rates or pull products entirely.
Which lenders are affected?
The wave of repricing and product withdrawals has accelerated over the past 48 hours:
| Lender | Action | Effective |
|---|---|---|
| Barclays | Rate increases across residential purchase & remortgage | 10 March |
| NatWest | Price increases on existing customer & additional borrowing | 10 March |
| Fleet Mortgages | ALL fixed rate products pulled (incl. product transfers) | Immediate |
| HSBC | Increases to fixed rate mortgage pricing | Last week |
| Nationwide | Fixed rate increases announced | Last week |
| Coventry BS | Fixed rate increases | Last week |
| Leeds BS | Pricing changes across fixed products | This week |
| Paragon Bank | Rate adjustments | This week |
| Accord | Product repricing | This week |
| Keystone | Rate changes | This week |
More lenders expected to reprice in the coming days
Industry experts warn lenders who only raised rates last week may need to do so again as funding costs continue to shift.
Why are gilt yields spiking?
The trigger is geopolitical. Escalating military action involving Iran has disrupted energy markets, with oil climbing sharply and shipping through the Strait of Hormuz being halted. Because the UK is highly sensitive to energy costs feeding into inflation, markets have quickly repriced their expectations for interest rates.
- Two-year gilt yields have risen around 21 basis points to roughly 4.08%
- Five-year gilt yields are up about 16 basis points to around 4.27%
- Rate cut expectations have collapsed — markets now see less than a 20% chance of a BoE cut on 19 March, down from near-certainty weeks ago
- Some traders are pricing in rate hikes — briefly as much as 16bps of increases by year-end, a complete reversal from the cuts expected previously
How fast has this turned around?
What does this mean for you?
If you're currently on a fixed rate deal
Your payments won't change until your deal ends. But if your fix is expiring in the next 6 months, this is a strong signal to start the remortgage process now. Most lenders let you secure a new rate up to 6 months before your deal ends — and you can switch to a cheaper rate if things improve before completion.
If you're on a Standard Variable Rate (SVR)
You're already overpaying. The average SVR is just below 8% — significantly more than the best fixed deals still available. Even with rates moving up, you can almost certainly do better by locking in a fixed rate now.
If you're buying a property
Don't assume rates will be cheaper in a few weeks. The recent downward trend has reversed and the direction is now uncertain. Securing a mortgage offer now gives you protection if rates continue to climb.
If you're a buy-to-let landlord
Funding costs for BTL products are equally affected. Fleet Mortgages, for example, has withdrawn all fixed products including product transfers.
The average SVR is close to 8%. If your fixed deal is ending soon and you haven't started looking, you risk rolling onto a rate that could be double what's available on the open market.
What are the best rates still available?
Despite the upheaval, competitive deals haven't disappeared entirely — but they're moving fast. As of today, the best 2-year fixed rate on the market is around 3.63% from Santander (60% LTV, £749 fee). The average 2-year fix at 60% LTV sits at about 3.71%, while the average 5-year fix is around 4.44%.
These rates were priced before the latest increases from Barclays and NatWest, so expect the averages to shift upward in the coming days.
Tip: Many lenders let you lock in a rate months ahead of your deal ending. If you secure a rate now and conditions improve, a good broker can switch you to the lower rate before completion. It works as insurance — you're protected if rates keep rising, but not locked out if they fall.
What happens next?
The honest answer: nobody knows for certain. It depends largely on how the geopolitical picture develops. Experts broadly outline three scenarios:
Scenario 1 — Tensions ease: Energy prices settle, gilt yields drift back down, and lenders resume the gentle rate-cutting trajectory we saw in February. Mortgage rates could recover within weeks.
Scenario 2 — Prolonged uncertainty: Inflation worries dominate, the BoE delays cuts into H2 2026 or beyond, and lenders continue repricing upward. The improvements of recent weeks unwind.
Scenario 3 — Full escalation: Conflict worsens and energy costs stay elevated, but growth concerns eventually pull yields back down. More volatile, but fixed rates could ultimately fall again via a bumpier path.
The Bank of England's Monetary Policy Committee meets on 19 March. Before this crisis, a rate cut was widely expected. That expectation has now been significantly dialled back.
The bottom line
The mortgage market has shifted rapidly and the window on the cheapest fixed rates is narrowing. Whether you're remortgaging, buying, or coming off a fixed deal, the smart move is to speak to an adviser now, secure a rate as insurance, and keep your options open. Waiting to time the bottom is a gamble — and right now, the market is moving in the wrong direction.
This article is for informational purposes only and does not constitute financial advice. Nesto connects you with FCA-regulated mortgage advisers who can provide advice tailored to your circumstances.