A number of lenders have repriced mortgage rates and withdrawn product ranges as volatility caused by the conflict in the Middle East continues.
Oil prices rose to the highest level since 2022, exceeding $100 per barrel and causing the stock market to fall.
Higher oil prices could lead to a rise in energy costs and subsequently put pressure on inflation, which has been declining in the last few months.
Nick Mendes, mortgage technical manager at John Charcol, said: “Although oil prices have pulled back from earlier peaks, they remain materially higher on the day, still trading a little above $100 and roughly 10% higher overall.
“Energy prices tend to be one of the first transmission points into inflation expectations, and that uncertainty has filtered straight through into government bond and swap markets.”
It has been suggested that this could reverse the previously forecast possibility of two base rate cuts this year and instead see the Bank of England raise interest rates.
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Jonathan Raymond, investment manager at Quilter, said: “Only a few weeks ago, the market was pricing a 95% chance of a cut in March; that probability is now closer to 2.5%. For investors and borrowers, the risk is that the Bank of England feels obliged to tighten policy again just as borrowers were expecting some relief.”
This expectation has caused gilt and swap rates to rise, putting upward pressure on mortgage pricing and leading some lenders to withdraw products.
Raymond added: “It raises costs for businesses, squeezes real incomes and risks keeping headline inflation above target for longer. If that persists, gilt yields and swap rates will remain under upward pressure, which is why we are already seeing mortgage pricing move higher before the bank has done anything. The bank is likely to initially look through the shock because it is energy-driven, but if the Middle East situation deteriorates further, the risk of policy tightening later in 2026 becomes harder to dismiss.”
Mortgage rate increases
Barclays, NatWest, Principality Building Society, Halifax, TSB, Santander and BM Solutions have adjusted their mortgage pricing.
Halifax has increased all two-, three- and five-year fixed and tracker purchase and remortgage rates, while selected product transfer and further advance rates have risen.
NatWest will raise existing borrower and additional borrowing rates, while its existing borrower BTL product at 90% LTV will be reduced. Further, it will launch a new additional borrowing BTL deal at 75% LTV.
Further, Barclays will lift rates across selected residential purchase and remortgage options.
Additionally, Principality Building Society has increased selected residential, buy-to-let (BTL), holiday let and joint borrower sole proprietor (JBSP) rates by as much as 0.3% and increased the fee on the five-year fixed residential mortgage at 95% loan to value (LTV) to £2,500.
BM Solutions will also increase rates across selected personal ownership BTL and let to buy, all limited company BTL and selected product transfer and further advance deals.
TSB has put up rates by as much as 0.15% across two-, three- and five-year fixed purchase and remortgage residential rates, as well as two- and five-year fixed purchase and remortgage BTL and portfolio BTL rates.
The bank will lower the cashback and pricing of its two-year fixed affordable housing remortgage by as much as 0.5%, while the cashback has been reduced to £300.
TSB will also launch two- and five-year fixed purchase and remortgage deals between 60% and 75% LTV with a £1,995 fee, for portfolio BTL borrowers. Further, the minimum loan amount for fee-free portfolio BTL has been dropped to £75,000.
Changes will take effect from 10 March.
On 11 March, Santander will increase selected rates by as much as 0.24%, applying to its first-time buyer and homemover, remortgage, BTL purchase and remortgage, residential large loan tracker, and fixed and tracker product transfer options.
Product withdrawals
Saffron Building Society announced it was temporarily withdrawing all fixed rate new business products, impacting BTL, residential and residential retention products at 60% and 80% LTV, while Aldermore has moved five-year fixes for residential, BTL and product switching.
Paragon Bank has also pulled its five-year fixed rates deals temporarily.
James Harrison, mortgages product manager at Paragon Bank, said: “Given recent market volatility and movements in swap rates, driven by the Middle East conflict, we are withdrawing our five-year fixed rate buy-to-let products for new business. This will take effect at 5pm on Monday 9 March.
“This is a temporary step, and we’ll reassess and provide an update soon as the market stabilises.”
Further, Fleet Mortgages has temporarily withdrawn its fixed rate deals, including product transfers.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “We’ve just let our intermediary partners know that, due to continued market volatility and the need to react to this, Fleet has decided to temporarily withdraw our fixed rate products, including product transfers, from 5pm tonight.
“Tracker products remain unchanged and we will be looking to relaunch new fixed rates as soon as possible. As already communicated, we require all applications to be fully completed, with all relevant fees paid, by 5pm today in order to secure a product from the existing range.”
Mendes said it was likely that another wave of lenders would withdraw or reprice deals in the next few days, including those who increased rates last week.
“When funding costs move this quickly, lenders typically respond fairly quickly as existing hedging rolls off, and they look to protect margins,” he said.
Mendes added: “Looking ahead to the next week or so, much will depend on whether markets settle or if volatility continues. Swap markets had previously been pricing in several Bank of England cuts this year, but expectations have shifted quickly.
“At this stage, we are closer to a scenario where perhaps only one cut materialises across the year, rather than the series markets had anticipated a few weeks ago.”
