A sharp rise in mortgage rates, driven not by domestic policy but by escalating geopolitical tensions in the Middle East, has reshaped the UK lending landscape in a matter of weeks. This case highlights how global events, particularly disruptions to oil supply, can rapidly impact pricing, product availability, and borrower strategy. While high street lenders have withdrawn hundreds of products and increased rates, opportunities remain within private banking and specialist lending for complex, high-value borrowers who require tailored solutions.

The average two-year fixed mortgage rate was 4.83% at the start of March. It is 5.30% today. That movement, 47 basis points in under three weeks, happened not because of anything the Bank of England decided, but because of military strikes on Iran.

I want to spend a moment on what that actually means, because the mainstream coverage has focused on first-time buyers and average mortgages. The mechanics matter more broadly than that.

At 12:00 GMT today, the MPC held the base rate at 3.75%. A month ago, a cut was essentially priced in. Inflation had fallen to 3%. Andrew Bailey had told the BBC in February that further rate reductions were likely this year. Then, US-Israeli strikes disrupted the Strait of Hormuz, oil prices moved, and inflation expectations reversed. Rate cut gone.

The mortgage market moved before today's decision. Lenders started pulling products within days of the conflict beginning. Barclays, HSBC, NatWest, Nationwide, and Santander have all withdrawn their sub-4% fixed deals. According to Moneyfacts, 689 products disappeared between 9 and 17 March, close to a tenth of the market. On a £250,000 mortgage, the cost has risen by £788 per year in a fortnight. On a £2 million mortgage, that same proportional shift adds around £9,400 per year.

The piece of this I think is being missed: this is not a repeat of the Liz Truss episode. That was a domestic policy shock, severe, but correctable. This is a geopolitical conflict tied to oil infrastructure, with no clear timeline for resolution. The 2022 repricing reversed in weeks once the policy mistake was corrected. The Iran-driven repricing has no equivalent correction mechanism unless the conflict de-escalates or oil prices pull back substantially.

What I'm watching now is not just fixed-rate pricing, but the broader direction of two-year gilt yields, which drive fixed mortgage costs. Those have moved sharply since late February. Until they stabilise, lenders will keep pricing in uncertainty, and borrowers will keep seeing the effects.

There is one thing I'd push back on in the coverage: the idea that the private and specialist lending market has simply mirrored the high street. It hasn't, not entirely. Private banks and international lenders, the segment my team works in, have repriced, but not uniformly. For borrowers with complex structures, large loan sizes, or international income, there is still optionality in this market that doesn't show up in the Moneyfacts averages. That requires knowing where to look, but the options exist.

The Bank publishes updated forecasts in May. By then, we'll have a clearer read on whether this is a lasting inflation shock or a temporary one. Until then, the rate path for the rest of 2026 is genuinely open, as it has not been for some time.