Recent Developments

On March 11, 2026, the average two-year fixed-rate mortgage hit 5.01%, while the typical rate on a five-year mortgage rose to 5.09%. In the past 48 hours alone, nearly 500 mortgage deals have been pulled, with 472 residential mortgage products withdrawn from the market, marking a significant shift in lending practices.

Impact on Borrowers

About 1.8 million fixed-rate deals are set to end in 2026, leaving many borrowers in need of securing new mortgages under these rising rates. 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 recent days have been some of the most turbulent in the UK mortgage market.

Future Expectations

The probability of a rate reduction this year has fallen to 20%, down from 50% just days prior on March 8, 2026. The base rate is expected to be held at 3.75% at the central bank’s meeting on March 19, 2026. French commented, “How far they could go is now heavily dependent on how global markets and inflation expectations evolve as conflict in the Middle East unfolds.”

Despite the current turmoil, some analysts believe that many of the withdrawn deals may return within the next few days and weeks as lenders adjust their pricing to higher rate expectations. However, details remain unconfirmed regarding the exact impact of the Middle East conflict on future mortgage rates.

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Barclays PLC shares have declined 14.1% year to date, a stark contrast to the 1.8% drop in the broader industry and a 1.9% decrease in the S&P 500 Index. This downturn has raised concerns among investors, particularly as Barclays navigates a challenging financial landscape.

In comparison, competitors have displayed varied performance; Deutsche Bank shares have plummeted 19% year to date, while HSBC Holdings plc has managed to gain 6.8% during the same period. This divergence in performance highlights the unique challenges facing Barclays, which have been exacerbated by investor apathy largely attributed to recent geopolitical headwinds.

Looking ahead, Barclays has announced plans to return more than £15 billion to shareholders between 2026 and 2028. This strategy includes a commitment to repurchase up to £1 billion of shares in the first quarter of 2026, aiming to bolster investor confidence and stabilize its share price.

Despite the current decline, Barclays has achieved £1.7 billion in total gross savings across 2024 and 2025, indicating a focus on improving operational efficiency. However, the bank’s credit impairment charges surged to £4.8 billion in 2020, a significant factor that has influenced its financial health and investor sentiment.

Barclays’ operating costs have recorded a three-year compound annual growth rate (CAGR) of 2% ending in 2025, while its total income has seen a more favorable CAGR of 5.3% from 2022 to 2025. These figures suggest that while the bank is facing short-term challenges, it is also laying the groundwork for future growth.

Currently, Barclays carries a Zacks Rank of #2 (Buy), indicating a positive outlook from analysts despite the recent share price decline. This ranking reflects confidence in the bank’s long-term strategies and potential for recovery.

Investor sentiment remains cautious as Barclays navigates these challenges, and details remain unconfirmed regarding the broader implications of geopolitical factors on its future performance. Observers will be closely monitoring how the bank’s strategic initiatives unfold in the coming years.

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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 this outlook. The Bank of England is now unlikely to cut interest rates, as rising inflation fears have taken center stage in the financial landscape.

In response to these changing economic conditions, major UK lenders have begun to increase mortgage rates. The average two-year fixed residential mortgage rate rose from 4.82% on March 4, 2026, to 4.84% by 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 a broader shift in market expectations regarding interest rates.

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%. Numerous 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 entirety of this year, with the likelihood of an interest rate rise before the end of the year estimated at 70%. This shift in expectations comes in the wake of rising inflation, which has been exacerbated by the ongoing conflict in the Middle East. Ben Perks, a financial analyst, remarked, “When Trump dropped his first bomb on Iran, it blew up all hope of a rate reduction this month.”

Mike Staton, another expert, added, “Yes, inflation is likely to tick up again with energy and fuel prices rising due to global conflict.” This sentiment underscores the concern that the geopolitical situation is having a direct impact on domestic financial conditions.

Adam French noted that mortgage rates had initially appeared poised to fall ahead of an expected March base rate cut. However, he stated, “the escalation of conflict in Iran has abruptly shifted the mood and revived inflation fears.” This shift has left many potential borrowers reconsidering their options in a rapidly changing market.

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 this uncertain financial landscape.

As the situation continues to evolve, observers will be closely monitoring the interplay between geopolitical events and domestic economic policies. The impact on mortgage rates and the housing market remains a critical area of focus for both consumers and financial institutions alike.

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