Just a few weeks ago, the mortgage market was looking genuinely positive. Lenders were competing hard, best-buy fixed rates had dropped below 4%, and most forecasts pointed to further cuts through 2026. Borrowers were cautiously optimistic. Then the situation in the Middle East escalated — and almost overnight, the picture changed.
As your mortgage broker, I want to cut through the noise and explain exactly what's happening, what it means for you, and — most importantly — what you should do about it right now.
In early March 2026, escalating conflict in the Middle East caused UK wholesale gas prices to surge by around 40% and oil prices to approach $80 per barrel. This has pushed swap rates — the rates that directly determine the cost of fixed mortgages — sharply higher. Major lenders including Nationwide, NatWest, HSBC and Coventry Building Society have already increased their fixed rates, with more expected to follow. Best-buy deals are being pulled with just a few hours' notice.
First — What Are Swap Rates and Why Do They Matter?
If you've seen talk of "swap rates" in the news and wondered what it means for your mortgage, here's a plain-English explanation.
When lenders offer you a fixed rate, they hedge their exposure in wholesale money markets using SONIA swap rates. When those swap rates rise — as they have sharply in March 2026 — lenders' funding costs increase, and they pass that on by raising mortgage rates. This happens independently of the Bank of England base rate, which is why fixed rates can rise even when the base rate hasn't moved. The 2-year SONIA swap has risen from 3.364% in mid-February to 3.895% on 16 March. The 5-year has moved from 3.557% to 3.978% over the same period.
The latest SONIA swap rates (as of 16 March 2026) tell the story clearly. The 2-year swap is now at 3.895% and the 5-year at 3.978% — up sharply from 3.364% and 3.557% respectively just a month ago in mid-February. That's a jump of over 0.4% in just four weeks, and lenders are repricing their products to reflect it.
Where Are Rates Now?
Here's a snapshot of where things stand in mid-March 2026, and how quickly the picture has shifted:
Rates are directionally higher than they were a few weeks ago — but it's important to keep perspective. We are not back to the crisis levels of 2023. Average two-year fixes had fallen to around 4.83% at the start of 2026 and five-year fixes to 4.91%. The best deals are still meaningfully below those averages for borrowers with decent equity or a good-sized deposit.
The Bank of England's Monetary Policy Committee announces its next base rate decision today, 19 March 2026. Just a few weeks ago, markets were pricing in a 75% chance of a cut. That has since dropped to around 15% following the geopolitical shock. A hold at 3.75% now looks most likely — but whatever happens, fixed mortgage rates are driven more by swap rates than the base rate, so don't expect a base rate cut to automatically bring fixed rates back down quickly.
2-Year Fix or 5-Year Fix — Which Should You Choose Right Now?
This is the question I'm being asked most right now. There's no single right answer — it depends on your circumstances — but here's how I'd think through it.
The 2-year vs 5-year decision has always been a bet on where rates will be in two years. If you fix for 2 years and rates have fallen significantly by then, you'll be able to remortgage to a cheaper deal. If rates stay the same or rise, you'd have been better off locking in for 5 years.
Right now, 2-year and 5-year swap rates are relatively close together — which means the premium for the extra security of a 5-year fix is relatively small. With genuine uncertainty about the direction of rates over the next 12–24 months, a 5-year fix offers meaningful peace of mind for not much extra cost.
"The hope had been that the brighter rate outlook would see more base rate cuts feed through this year. The current unrest is going to rip up those forecasts in the near term and underlines the risks in pinning hopes on market predictions."— David Hollingworth, L&C Mortgages
My honest view: if you're coming up to the end of a deal in the next 6 months, the most sensible thing is to secure a rate now rather than wait and hope the market improves. Here's why — and it's a crucial point that many borrowers don't know:
If you secure a mortgage rate today and rates fall before your deal starts, your broker can often switch you to a better rate right up until two weeks before completion. So securing now doesn't mean you're stuck — it means you're protected if rates rise further, with the flexibility to improve if they fall. It's the best of both worlds.
Should You Act Now or Wait?
Here's a simple guide based on your situation:
✅ Act Now If...
- Your current deal ends in the next 6 months
- You're already on a Standard Variable Rate
- You're in the process of buying a home
- You want payment certainty and don't like uncertainty
- You have dependants relying on predictable outgoings
- You're stretching affordability and need stability
⏳ You May Have More Time If...
- Your deal doesn't end for 6–12 months+
- You're comfortable with some rate risk
- You're planning to move home in the next year
- You want to see how the Middle East situation develops
If your fixed deal has already ended and you've rolled onto your lender's Standard Variable Rate, you could be paying 6.5–7%+ right now. Every month you delay is costing you hundreds of pounds. This should be your top financial priority.
What This Means for London Homeowners Specifically
The stakes are higher in London simply because mortgage balances are larger. On a £500,000 mortgage, the difference between a 4% rate and a 4.5% rate is around £140 per month — over £1,600 a year. Getting the timing and product choice right matters more here than almost anywhere in the UK.
London homeowners who bought in the last 5–10 years have also typically seen their properties rise in value, which means their loan-to-value ratio has improved — potentially putting them in a better rate band than they were in originally. It's worth getting this assessed properly before you assume what rate you'll qualify for.
How AJM Financial Can Help
In volatile markets like this one, having an experienced whole-of-market broker on your side is more valuable than ever. Here's what we do:
- Search the entire market — including lenders not on comparison sites — to find the most competitive rate for your circumstances right now
- Monitor rates on your behalf — if rates move after you've applied, we'll flag it and switch you if it makes sense
- Package your application correctly — so you get a fast decision and don't lose a deal due to paperwork issues
- Advise on 2 vs 5 year — based on your specific circumstances, not a one-size-fits-all view
- No broker fees in most cases — we're paid by the lender, so our advice costs you nothing
The market is moving quickly. If you're within 6 months of a remortgage or in the process of buying, I'd strongly encourage you to get in touch today rather than waiting to see what happens next.
Call AJM Financial on 0203 137 5213, or book a free consultation online. We'll assess your situation, tell you exactly what's available, and give you honest advice on whether to act now or hold on. Available around the clock — no queues, no call centres.
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 indicative and subject to change — rates correct at time of writing but may have changed. This article is for information purposes only and does not constitute financial advice. Please speak to a qualified adviser about your individual circumstances.
