Are Interest Rates Set to Go Up? How the Middle East Conflict Could Hit Your Finances
A homeowner getting ready to remortgage might have thought the worst of the rate pressure was behind them. Lenders had started to price more competitively, borrowers were feeling a little more confident, and the sense of panic that defined the last few years had started to ease. Then global events changed the conversation again.
That is often how the mortgage market works. It does not move in isolation. A conflict overseas can seem distant, but when it affects oil and gas prices, it can also influence inflation, the Bank of England, and the cost of borrowing here in the UK. That is why anyone reviewing mortgage advice, remortgage options, or fixed-rate mortgages should pay attention to what happens next.
Why this matters to UK households
The latest reports suggest the conflict in the Middle East has raised concerns about rising energy prices, which could feed back into inflation and make future Bank of England decisions more difficult. The Independent reports that the Bank of England cut rates four times during 2025, taking the main rate from 5.25% down to 3.75%, but markets are now less certain about how quickly further cuts might follow.
That does not automatically mean rates are about to rise. It does mean the path down may no longer look as smooth as it did a short while ago. For borrowers, this is a useful reminder that speaking to a mortgage broker is not just a call to action. It is often the most sensible step when the market becomes less predictable.
How a global conflict can affect mortgage rates
Mortgage pricing is not based only on today’s Bank of England base rate. Lenders also respond to inflation expectations and swap rates, which tend to move ahead of official decisions. The Independent notes that some major lenders have already increased certain fixed-rate products, with some deals moving by around 0.1% to 0.25% as expectations shift.
That matters if you are comparing remortgage advice, looking at home mover mortgages, or researching first-time buyer mortgage advice. Even small changes in rate pricing can affect affordability, especially when they come alongside higher day-to-day living costs.
Why borrowers should not focus on headlines alone
It is easy to see a headline about conflict and assume rates are definitely going up. The reality is more nuanced.
Some analysts now believe a March rate cut looks unlikely, while others still think further cuts are possible later if energy prices settle and economic growth remains weak. The same article highlights that markets had been pricing in more cuts this year, but that expectation has softened because of inflation concerns linked to rising energy prices.
This is where good mortgage broker advice adds real value. Instead of reacting emotionally to a headline, borrowers should consider their timing, budget, and available options now.
What this could mean for your finances
The most immediate impact may not even be your mortgage. If oil and gas prices stay elevated, households could feel the pressure first through fuel, transport, food, and general living costs. The Independent points out that rising oil and gas prices could increase the cost of goods and food, as well as mortgage costs, if the situation continues.
That is especially relevant for people reviewing the cost-of-living mortgage support, preparing for a product transfer, or weighing up fixed-rate mortgage options. Higher household spending can tighten affordability even before a lender changes its rates.
For homebuyers, this could also affect confidence. The article notes that Halifax recorded a 0.3% rise in average house prices in February to just over £301,000, showing that the housing market had been showing signs of improvement before this latest uncertainty.
A calmer approach for borrowers
From a Connect perspective, this is not a moment for panic. It is a moment for preparation.
If your current deal ends soon, now is a sensible time to review remortgage deals rather than waiting and hoping the market improves. If you are buying, it is worth reviewing your budget again and deciding how comfortable you would be if rates do not fall as quickly as expected. If you are already on a variable rate, this may be the right time to explore a fixed-rate mortgage. For more in-depth information on this, visit our page “What Happens When a Fixed Rate Ends?”
The strongest borrowers are rarely the ones who try to outguess every market move. They are the ones who plan early, understand their options, and act before pressure builds. ~
It is not all bad news for savers
There may be one small upside. If rate cuts are delayed, some savings rates could remain stronger for longer. The Independent reports that the best easy-access savings rates were around 4.5%, and that some cash ISA providers had already started increasing rates to compete. It also notes the importance of the 5 April ISA deadline for savers wanting to use their tax-free allowance.
That will not offset every increase in household costs, but it does mean people reviewing protectionand insurance advice, financial wellbeing, or broader household budgeting may want to look at both sides of the equation, not just borrowing.
Final thought
So, are interest rates set to go up?
Right now, the better answer is that uncertainty has gone up. The market had been moving towards lower borrowing costs, but conflict-driven energy price pressure has complicated the picture. That means borrowers should be realistic, not fearful.
For many people, the biggest financial mistake is not choosing the wrong product. It is doing nothing while the market changes around them.
Thank you for reading our “What Happens When a Fixed Rate Ends? | Connect Mortgages” publication. Stay “Connect“-ed for more updates soon!
