Originally published: 15 March 2026. Reviewed for accuracy: 10 June 2026. This is a dated news post tied to specific events in early 2026; it is not intended as evergreen advice.
By Stiv · Design, technology and personal finance
I write this with skin in the game: a Nationwide mortgage of my own, plus £100 a month in overpayments running through Sprive since October 2021, so I have watched these rate swings over four-plus years as a borrower, not just a blogger.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
CoolCuration is not authorised or regulated by the Financial Conduct Authority and does not provide financial advice. The information below is for general informational purposes only. Always seek advice from an FCA-regulated broker or adviser before making mortgage decisions.
If you've been watching the news this year, you'll know the Middle East conflict has thrown a spanner into the UK's financial outlook. UK mortgage rates climbed again after weeks of improvement, lenders pulled deals, and energy prices headed in the wrong direction. Whether you're on a fixed-rate mortgage nearing renewal or simply trying to keep your gas bill under control, the events of early 2026 have had lasting consequences. Here's what happened, what it means for your money, and what you can actually do about it.
Why did UK mortgage rates rise again?
Just weeks before the conflict escalated, the UK mortgage market was heading in the right direction. Lenders were trimming fixed rates, sub-4% deals were appearing, and confidence was growing that the Bank of England would cut rates further in 2026. Then the Middle East kicked off.
Following coordinated US-Israeli strikes on Iran at the end of February, oil and gas prices spiked. Swap rates, which are the wholesale benchmarks lenders use to price fixed-rate mortgages, jumped sharply. As a result, sub-4% deals completely vanished from the residential market.
The knock-on effect was dramatic. According to Moneyfacts, the average two-year fixed mortgage rate climbed from 4.84% on 6 March to around 5.51% by 24 March. Five-year fixes followed a similar path, rising from roughly 4.95% to about 5.52% over the same period. That was a brutal swing in under three weeks. By 8 June 2026, the average two-year fix stood at 5.64% and the average five-year fix at 5.60%, according to the same source.
Major lenders including HSBC, Barclays, Santander, NatWest, Nationwide, and Halifax all repriced or withdrew products. Hundreds of residential mortgage deals were pulled from the market since the conflict started.
What has the Bank of England decided?
The Bank of England's Monetary Policy Committee (MPC) met on 19 March 2026 and voted unanimously to hold the base rate at 3.75%. That was a notable shift from February's narrow 5-4 vote, where four members had pushed for a cut.
The MPC met again on 30 April 2026 and voted 8-1 to hold the base rate at 3.75%. One member (Huw Pill) voted to increase the rate to 4.0%, citing risks of second-round inflationary effects. The minutes confirmed that CPI inflation had risen to 3.3% and was likely to increase further as higher energy prices pass through. The Bank noted that financial conditions had tightened materially since the onset of the conflict, which would help reduce inflation over time. Source: Bank of England, April 2026 MPC minutes.
The next MPC decision is due on 18 June 2026. Before the conflict, markets were pricing in decent chances of rate cuts. That optimism has evaporated; markets have since shifted toward pricing in potential rate increases rather than cuts, depending on how the energy shock develops. The MPC has made clear that its response will be state-contingent, with more aggressive tightening only if second-round inflation effects materialise strongly.
Should you remortgage now?
For deals ending within six months, some borrowers choose to lock in a rate in advance; a broker can help, as lenders may let you switch to a cheaper deal if rates fall before completion. Most lenders allow you to secure a new rate up to six months in advance.
Right now, average fixed rates sit above 5%. The average standard variable rate is significantly higher, meaning rolling onto an SVR when your deal ends could cost you hundreds of pounds extra each month. Speak to an FCA-regulated broker to understand the options for your circumstances.
If you're not in a position to remortgage right now but want to chip away at your balance, mortgage overpayments are a solid strategy. Apps like Sprive make it easy to automate overpayments and track how much interest you're saving. We've covered the ins and outs in our Sprive mortgage app review.
Try Sprive and get a welcome bonusSprive Limited (FRN 919863) is an appointed representative of Connect IFA Ltd (FRN 441505), which is authorised and regulated by the Financial Conduct Authority; verify on the FCA register. Money in the Sprive wallet is held by PrePay Technologies Ltd (FRN 900010) as safeguarded e-money, not FSCS-protected.
What happened with energy prices?
The same conflict hit energy bills. Wholesale gas prices surged sharply from late February, and oil prices climbed above $100 per barrel. QatarEnergy, one of the world's largest LNG exporters, halted production after strikes on its facilities, cutting global short-term LNG supply significantly.
Ofgem's energy price cap for Q2 2026 (April to June) dropped to £1,641 per year for a typical household, down from £1,758. On top of that, the government scrapped the ECO levy and moved green levies to general taxation, saving households an estimated £150 annually. However, that relief proved short-lived.
Ofgem confirmed on 27 May 2026 that the Q3 2026 price cap (July to September) will rise by 13% to £1,862 per year for a typical household paying by direct debit. Source: Ofgem, 27 May 2026. At the time of writing in March 2026, forecasters E.ON Next and Cornwall Insight had predicted figures of £1,955 and £1,972 respectively; the confirmed figure came in lower than those forecasts but still represents a significant increase. Ofgem has since confirmed the Q3 figures and there is no longer any uncertainty on that point.
Should you fix your energy tariff?
This is a question many households faced in early 2026, and the answer depended on risk appetite. If you fixed in spring 2026 before the cap rise was confirmed, you may have locked in a rate below the Q3 cap. If you remained on a variable tariff, you will face the 13% rise from July 2026.
On the other hand, if you're on a competitive tracker like Octopus Tracker, check your current unit rates against the confirmed cap figures before deciding whether to switch. You can switch to Octopus Energy here and get a referral reward while you're at it.
Switch to Octopus EnergyThe bigger picture
What was frustrating about all of this was that, just weeks before the conflict escalated, the outlook had been cautiously optimistic. Inflation was expected to return to the Bank of England's 2% target by mid-2026. Mortgage pricing was improving. Energy bills were falling. The Middle East conflict upended those trends in a way that echoes the disruption caused by Russia's invasion of Ukraine in 2022.
Bank of England staff projections in April 2026 suggest that CPI inflation could reach 3.3% or higher in Q3 2026, partly driven by the energy cap rise. Financial conditions have tightened materially since the conflict began, which will help reduce inflation over time, but the balance between inflation and output remains uncertain and the MPC's response will depend on how the situation evolves.
For homeowners and bill-payers, the practical takeaway remains the same: reviewing your options now rather than waiting gives more time to compare, whatever you decide. Whether that means looking at mortgage rates, overpaying where you can, or reviewing energy tariffs, the information is there to act on.
This article is for informational purposes only and does not constitute financial advice. Mortgage and energy markets can change rapidly. Always seek independent FCA-regulated advice before making financial decisions. CoolCuration is not authorised or regulated by the FCA. Your home may be repossessed if you do not keep up repayments on your mortgage. This page contains affiliate or referral links; if you sign up through one, I may earn a referral bonus at no extra cost to you.
Frequently asked questions
Are UK mortgage rates rising because of the Middle East conflict?
Yes. The conflict pushed up oil and gas prices, which drove swap rates higher. Since lenders use swap rates to price fixed-rate mortgages, many increased rates or pulled deals entirely. According to Moneyfacts, the average two-year fixed rate rose from 4.84% to around 5.51% between early and late March 2026, and stood at 5.64% as of 8 June 2026. Sub-4% deals completely vanished from the market.
What did the Bank of England decide in March and April 2026?
The MPC voted unanimously to hold the base rate at 3.75% on 19 March. At its 30 April 2026 meeting, the MPC voted 8-1 to hold at 3.75%, with one member voting for an increase to 4.0%. CPI inflation had risen to 3.3% by March 2026. The next MPC decision is due on 18 June 2026. Source: Bank of England.
Should I remortgage now or wait?
If your deal ends in the next six months, locking in a rate now could be a sensible move. You can usually secure a new rate months in advance, and if rates drop before completion, many lenders will let you switch to a cheaper deal. Waiting risks rolling onto a standard variable rate. Speak to an FCA-regulated broker to understand the options for your specific circumstances.
What is the confirmed Ofgem energy price cap for Q3 2026?
Ofgem confirmed on 27 May 2026 that the price cap for Q3 2026 (July to September) is £1,862 per year for a typical household paying by direct debit. This is a 13% increase from the Q2 cap of £1,641. Source: Ofgem, 27 May 2026.
Is it worth fixing my energy tariff right now?
It depends on your current tariff and risk appetite. The Q3 2026 cap is confirmed at £1,862. Compare any fixed deal you're being offered against this cap and your likely consumption before deciding.
Can mortgage overpayments help in this environment?
Overpaying reduces the balance interest is charged on, which can help in a high-rate environment, subject to your lender's allowance. Apps like Sprive can automate the process and show you exactly how much you're saving. Check your lender's overpayment limits first, as most cap it at 10% per year.
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