Rising mortgage rates and market volatility are reshaping borrowing decisions, as UK borrowers face higher costs and increasing uncertainty around future interest rate movements and central bank policy.

The average two-year fixed mortgage rate in the UK hit 5.10% on Friday. That is up 26 basis points in a single week. The five-year equivalent is now 5.19%. Skipton Building Society repriced its residential range on Saturday morning. Since 9 March, at least 530 fixed-rate products have been withdrawn from the market, roughly 7.5% of all available residential deals.

Less than three weeks ago, markets were pricing a 90% probability of a Bank of England rate cut at this Thursday's MPC meeting. That probability is now around 30%. Interest rate futures have gone from pricing two cuts in 2026 to pricing none. Forty-three of fifty economists polled by Reuters expect the MPC to hold at 3.75% on 19 March. The outcome gets announced at noon on Thursday.

Borrowers who held back in February, expecting rates to fall, have watched the average two-year fix move from approximately 4.80% to 5.10% in a fortnight. That movement is the cost of waiting. Certainty has a price in this market, and right now that price is rising. The window most lenders offer to lock in a rate, typically up to six months before your current deal expires, exists precisely because timing carries execution risk. Using it is not a passive decision.

The MPC faces a genuinely uncomfortable data set on Thursday. UK CPI inflation is at 3.0%, above the 2% target. The February vote was 5-4 to hold. Brent crude is above $100 a barrel. Deutsche Bank analysts have warned inflation could approach 4% by end-2026 if the Hormuz closure continues. The economists polled by Reuters expect a hold on Thursday and the first cut in April or June, two cuts total across the year. The distribution of outcomes is wider than at any recent MPC meeting.

Around 1.8 million fixed-rate mortgages expire in 2026. A borrower rolling off a 1.5% two-year deal agreed in late 2021 onto the current 5.10%average will see monthly payments on a £500,000 repayment mortgage rise by approximately £1,400. That is what the conversation looks like for most of the market. For borrowers with investment portfolios, foreign income, trust structures, or deferred remuneration, which describes most of the clients my firm works with, the structure of the deal matters as much as the headline rate. Private banks and specialist lenders are still lending competitively against complex profiles. The average tells only part of the story.

In Dubai, the gap between financial markets and the physical property market is striking. The Dubai real estate stock index lost more than 15% in the week following the outbreak of the Iran conflict. Physical sales in the week of 2-9 March totalled Dh11.93 billion, and a single Aman Residences apartment sold for AED 422 million during the conflict. Inquiry levels are running about 45% below normal, but viewings recovered sharply, up 75% by the latter part of that week. Bond markets and equity indices can move on sentiment and forced selling. Buyers completing a £10 million purchase at Aman are operating on a different timescale.

Savills' March housing market update noted that agreed UK sales in February exceeded 2025 levels for the first time since September. The spring market was building before swap rates moved. Whether that pipeline holds with two-year fixes back above 5% will be clear in April's transaction numbers.

The MPC decision on Thursday is priced as a hold. What I am watching is the statement, specifically how the committee characterises the inflation risk from sustained energy price pressure, and whether the language around April leaves the door open or closes it.