If you've been watching the mortgage market this month — or you have a deal coming to an end — you'll already know that something has shifted. Just a few weeks ago, lenders were trimming rates and the outlook was cautiously optimistic. Then the Middle East conflict escalated, oil prices surged, and in the space of days the picture changed dramatically.
As of this week, virtually every major lender has raised their fixed rates. Average two-year fixes have climbed from 4.83% to 5.35% — a jump of over half a percentage point — and more increases are expected. This article explains what's driving it, what the current numbers actually are, and most importantly: what you should do right now.
Barclays, NatWest, Nationwide, HSBC, Santander and many other lenders raised their mortgage rates during the week ending 20 March 2026. If you have a deal expiring in the next 3–6 months, this directly affects you. Speak to a broker before rates move again.
What's Happening in the Market Right Now
The UK mortgage market runs on a complicated interplay of forces — and right now, several of them are pushing costs upward at once.
The Bank of England's Monetary Policy Committee voted unanimously to hold the base rate at 3.75% on 19 March 2026. On the surface, that sounds like stability. But the hold came alongside language from the MPC that left the door open to rate rises — not just cuts — amid persistent inflation concerns tied to surging energy costs and what markets have started calling "Trumpflation": the inflationary spillover from US tariff policy.
Fixed-rate mortgages, however, don't follow the base rate directly. They're priced from SONIA swap rates — the rates at which lenders can lock in their own funding costs in the wholesale market. And those have surged.
What Are SONIA Swap Rates — and Why Do They Matter?
Most people have heard of the Bank of England base rate, but far fewer know about SONIA swap rates — even though they're arguably more important for anyone on a fixed-rate mortgage.
SONIA stands for the Sterling Overnight Index Average. It reflects the cost at which banks borrow from each other overnight in sterling. A SONIA swap is a contract that extends this to longer timeframes — two years, five years — and it represents lenders' cost of funding a fixed-rate mortgage product. When swap rates rise, lenders' costs rise, and they pass that on to borrowers through higher fixed rates.
Critically, swap rates reflect what financial markets expect interest rates to do in the future — not just where they are today. This is why fixed mortgage rates can go up even when the base rate hasn't moved. And it's exactly what we're seeing now.
As of 19 March 2026, the 2-year SONIA swap rate stands at 4.242% — up sharply from 3.368% on 20 February. The 5-year swap sits at 4.148%, up from 3.556%. That's a near-one-percentage-point rise in under a month on the 2-year. Notably, the curve is currently slightly inverted — the 2-year rate is higher than the 5-year — which has implications for which fixed term makes most sense right now.
Here's the full SONIA swap picture as of 19 March 2026, sourced from Chatham Financial:
| Term | 19 Mar 2026 | 20 Feb 2026 | Change (1 month) |
|---|---|---|---|
| 1 Year | 4.198% | 3.399% | ↑ +0.799% |
| 2 Year | 4.242% | 3.368% | ↑ +0.874% |
| 3 Year | 4.187% | 3.419% | ↑ +0.768% |
| 5 Year | 4.148% | 3.556% | ↑ +0.592% |
| 10 Year | 4.310% | 3.912% | ↑ +0.398% |
Notice the pattern: shorter-term rates have risen the most sharply — the 2-year is up nearly 0.9% in a single month. This reflects the market's reassessment of near-term Bank of England policy. Longer-term rates have also risen, but less dramatically, as markets still expect rates to normalise eventually.
The Middle East Factor: Energy, Inflation, and Rates
The trigger for this latest repricing was the escalation of conflict in the Middle East. Markets reacted immediately, and the effects are being felt directly in UK mortgage costs.
Here's the chain reaction:
- The conflict pushes up oil and gas prices, as markets price in supply disruption risk.
- Higher energy costs feed directly into UK inflation — including household energy bills, transport, and the cost of goods.
- Higher inflation makes the Bank of England less likely to cut rates — and markets are now even pricing in the possibility of a rate rise, not just a hold.
- SONIA swap rates surge as expectations of future rate cuts are scaled back.
- Lenders raise their fixed mortgage rates to protect their margins.
Analysis from Moneyfacts showed that since the US-Iran conflict began, two- and five-year swap rates have risen by approximately one percentage point. One industry commentator put it plainly: "A more volatile world is a more expensive world."
Which Lenders Have Raised Rates?
The repricing has been sweeping. In the week ending 20 March 2026 alone, the following lenders announced increases:
| Lender | What Changed | Scale of Increase |
|---|---|---|
| Barclays | Existing residential range (2, 3, 5, 10-yr fixes) | ↑ 0.15% |
| NatWest | 2-yr fix remortgage (40%+ deposit) & most other products | ↑ ~0.35% |
| Nationwide | Selected fixed rates, new & existing business | ↑ up to 0.35% |
| HSBC | Residential & BTL range — FTBs, movers, remortgagers | Effective 23 Mar |
| Santander | FTBs, movers, remortgages, BTL, product transfers | ↑ up to 0.19% |
| BM Solutions | Buy-to-let and let-to-buy fixed rates | ↑ 0.08–0.19% |
The Co-operative Bank went further — withdrawing all products for new customers entirely, with no immediate replacement announced. This level of market activity in a single week is significant and reflects how quickly conditions can move.
What Happens Next?
The honest answer is that nobody knows for certain — and anyone telling you otherwise is speculating. But here's the informed view based on current market pricing and expert analysis.
There are two plausible paths from here:
Scenario 1: Conflict Eases, Swap Rates Retreat
If Middle East tensions de-escalate and energy prices stabilise, the inflationary pressure eases. The Bank of England would then have room to proceed with rate cuts later in 2026, swap rates would fall, and we could see fixed mortgage rates begin to edge back down. In this scenario, borrowers who wait could eventually benefit — but timing the market is notoriously difficult.
Scenario 2: Prolonged Uncertainty, Rates Stay Elevated
If conflict continues or broadens, energy prices remain elevated and inflation stays sticky. The MPC holds or even raises the base rate. Swap rates stay high or rise further, and mortgage rates remain at current levels or increase again. This is the scenario lenders are currently pricing for.
As of late March 2026, market expectations have shifted significantly. A base rate cut at the 19 March MPC meeting — which had seemed likely just weeks ago — did not materialise. The next MPC meeting is 8 May 2026. Whether a cut arrives then will depend heavily on how energy prices and inflation data evolve over the next six weeks.
What Should You Do Right Now?
This is the most important section — because whatever happens to rates globally, the right move for you depends on your personal situation. Here's how to think about it.
Deal ending in the next 3–6 months? Act now.
Most lenders allow you to secure a new rate up to 6 months before your current deal ends. Locking in today protects you from further increases. If rates fall before your completion, a good broker can often switch you to a better deal.
2-year or 5-year fix? The curve is telling you something.
Right now the SONIA curve is slightly inverted — the 2-year swap (4.242%) is actually higher than the 5-year (4.148%). This is unusual and means lenders' costs for short-term funding are greater than for longer terms. In practice, 5-year fixes may currently offer better value than 2-year deals — the opposite of what borrowers might assume. Your broker can model both options for your exact situation.
Don't automatically follow your existing lender.
Lenders typically offer product transfer rates to existing customers — but these are not always the best available. A whole-of-market broker searches across the full market and can often find a more competitive deal elsewhere.
Buying soon? Get your mortgage application in quickly.
If you have a purchase going through, speak to your broker about locking in an offer before further lender repricing. Some lenders will hold a rate for 3–6 months. With further increases possible, speed matters.
On a tracker? Understand your position.
If you're on a tracker mortgage, your payments are tied to the base rate — not swap rates. The base rate is currently 3.75% and hasn't moved. However, with the possibility of further holds or even a rise, it's worth modelling what your payments would look like under different base rate scenarios.
How AJM Financial Can Help You Navigate This
At AJM Financial, we monitor the mortgage market daily — including SONIA swap movements, lender repricing activity, and economic developments. When conditions change as rapidly as they have this month, having an experienced broker in your corner is more valuable than ever.
As a whole-of-market broker, we have access to every lender on the market — including exclusive rates not available directly to borrowers or on comparison sites. We don't just find you a rate; we structure your application to maximise your chances of approval and minimise your cost over the long term.
- Free, no-obligation initial consultation — phone, video, or email
- Access to the entire market, including exclusive broker-only deals
- One dedicated adviser from first call to completion
- We work around you — evenings and weekends, no call centres
- No broker fee in most cases
With lenders repricing weekly and the market in flux, the best time to speak to a broker is now. Call us on 0203 137 5213 or book a free consultation online — we'll review your situation and tell you exactly what your options are.
Your home may be repossessed if you do not keep up repayments on your mortgage. AJM Financial Limited is an Appointed Representative of Stonebridge Mortgage Solutions Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 11333894. Rate information is based on publicly available market data as of March 2026 and is subject to change — figures are for illustrative purposes only. Speak to an adviser for current, personalised advice.
