The upheaval in the mortgage market is the biggest since the aftermath of the 2022 mini-budget. Average mortgage rates in the UK have surpassed 5%, driven by turmoil in the home loan market linked to the ongoing conflict in the Middle East.

As of March 11, 2026, the average two-year fixed-rate mortgage has reached 5.01%, while the typical rate on a five-year mortgage is now 5.09%. This rapid increase has led to nearly 500 mortgage deals being pulled in just 48 hours, marking a significant shift in the lending landscape.

In total, 472 residential mortgage products were withdrawn from the market during this period. The swift actions by lenders reflect the heightened uncertainty surrounding future interest rates, with the probability of a rate reduction this year dropping to 20% from 50% just days prior.

Adam French, a housing expert, noted, “It’s unwelcome news for borrowers, as the prospect of falling mortgage rates has quickly given way to rate rises.” He further emphasized that the extent of future rate changes will depend heavily on global market conditions and inflation expectations as the conflict evolves.

Looking Ahead

Approximately 1.8 million fixed-rate deals are set to expire in 2026, necessitating that many borrowers secure new mortgages under these challenging conditions. Observers expect that many of the withdrawn deals may return in the coming days and weeks as lenders recalibrate their pricing strategies in response to the new rate expectations.

Details remain unconfirmed regarding the exact impact of the Middle East conflict on future mortgage rates, but the current situation underscores the volatility in the market. The base rate is anticipated to be held at 3.75% during the central bank’s meeting on March 19, 2026, which may provide some stability in the short term.

As the situation develops, stakeholders in the mortgage market will be closely monitoring both domestic and international factors that could influence lending rates and borrower options in the near future.

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Barclays PLC shares have experienced a notable decline of 14.1% year to date, a stark contrast to the broader industry which has dropped only 1.8% during the same period. In comparison, the S&P 500 Index has seen a slight decrease of 1.9%, indicating that Barclays is underperforming relative to both its peers and the overall market.

In the context of the banking sector, Barclays’ share price decline is particularly significant when compared to other major players. For instance, Deutsche Bank shares have plummeted 19% year to date, while HSBC Holdings plc has bucked the trend with a gain of 6.8%. This divergence in performance raises questions about investor confidence in Barclays amidst ongoing geopolitical headwinds.

Despite the current downturn, Barclays has announced plans to return more than £15 billion to shareholders between 2026 and 2028. This commitment is part of a broader strategy to enhance shareholder value, which includes an intention to repurchase up to £1 billion of shares in the first quarter of 2026. Such moves could signal to investors that the bank is taking proactive steps to stabilize its share price and improve market sentiment.

Furthermore, Barclays has achieved £1.7 billion in total gross savings across the years 2024 and 2025, which may help bolster its financial standing. However, the bank’s credit impairment charges surged to £4.8 billion in 2020, highlighting past challenges that could still impact its current operations and investor perceptions.

Looking at operational metrics, Barclays has recorded a three-year compound annual growth rate (CAGR) of 2% for operating costs, which ended in 2025. In contrast, its total income has shown a healthier CAGR of 5.3% from 2022 to 2025. These figures suggest that while the bank is managing costs effectively, it is also generating income growth that could support future profitability.

Investor apathy toward Barclays shares can largely be attributed to recent geopolitical headwinds, which have created a challenging environment for financial institutions. As the market continues to navigate these uncertainties, Barclays’ ability to execute its plans for shareholder returns and manage operational costs will be critical in restoring investor confidence.

Currently, Barclays carries a Zacks Rank of #2 (Buy), indicating a favorable outlook from analysts despite the recent share price decline. Observers will be closely monitoring how the bank’s strategies unfold in the coming months, particularly as it aims to implement its share repurchase program and deliver on its long-term return commitments. Details remain unconfirmed regarding the exact timing and execution of these plans, but the market will be watching closely for any updates.

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Prior to the outbreak of war, mortgage rates had largely been expected to continue on a downward trend in the UK this year. However, the recent escalation of conflict in Iran has significantly altered the economic landscape, leading to rising inflation fears that are now impacting mortgage rates across the country.

The Bank of England is unlikely to cut interest rates due to these inflationary pressures. As Ben Perks noted, “When Trump dropped his first bomb on Iran, it blew up all hope of a rate reduction this month.” This sentiment is echoed by Mike Staton, who stated, “Yes, inflation is likely to tick up again with energy and fuel prices rising due to global conflict.” These statements underscore the growing concern among financial experts regarding the stability of interest rates.

In response to the changing economic conditions, major UK lenders have begun to increase mortgage rates. For instance, the average two-year fixed residential mortgage rate rose from 4.82% to 4.84% between March 4 and March 9, 2026. Similarly, the average five-year fixed residential mortgage rate increased from 4.94% to 4.96% during the same period. This upward trend reflects the shifting expectations surrounding interest rates and the broader economic environment.

Barclays has announced that it will raise rates on some mortgage products starting March 10, 2026. As of March 9, 2026, the average two-year fixed homeowner mortgage rate stood at 4.87%, while the average five-year fixed homeowner mortgage rate was 4.98%. Other lenders, including HSBC and Nationwide, have also adjusted their fixed-rate offerings upwards, indicating a widespread response to the current economic climate.

Market analysts are now pricing in the possibility of only one rate cut for the whole of this year, with the likelihood of an interest rate rise before the end of the year now at 70%. This shift in expectations has left many potential homebuyers and homeowners reassessing their mortgage options in light of the changing rates.

House prices have also been affected, with a reported increase of 0.3% in February 2026 following an 0.8% rise in January 2026. The escalation of conflict in Iran has revived inflation fears, further complicating the housing market dynamics. Adam French remarked, “Mortgage rates had looked poised to fall ahead of an expected March base rate cut, but the escalation of conflict in Iran has abruptly shifted the mood and revived inflation fears.”

Looking ahead, Alice Haine pointed out that if the Middle East conflict proves short-lived and mortgage rates ease again, brokers can often switch borrowers to a better rate on their product right up until two weeks before their mortgage term starts. This flexibility may provide some relief for borrowers navigating the current landscape of rising mortgage rates.

As the situation continues to evolve, the implications for mortgage rates and the broader housing market remain to be seen. Observers will be closely monitoring the developments in Iran and their potential impact on inflation and interest rates in the UK.

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