A prominent industry figure is warning that rate cuts may be on ice thanks to the uncertainty surrounding the Iran War.
Amanda Bryden, head of mortgages at Halifax, says: “Geopolitical uncertainties seem set to influence the outlook for inflation and the wider economy.
“Against that backdrop, markets are now anticipating a more gradual path for interest‑rate reductions.
“If realised, the speed at which borrowing costs ease may be tempered.”
Only two weeks ago some analysts were forecasting as many as three base rate cuts by the Bank of England this year, beginning this month.
However, some lenders began increasing their rates at the end of last week, after months of price competition saw rates being slashed.
Tom Bill, head of UK residential research at Knight Frank, agrees with the Halifax analysis.
He says: “A prolonged conflict in the Middle East would dampen sentiment and delay rate cuts due to rising inflation, which would put downwards pressure on prices.
“That said, we have seen how quickly interest rate expectations can change this year, and the underlying weakness in the jobs market is one of several reasons that multiple cuts could come back onto the table in 2026.
“A lot hinges on the length of the conflict.”
Alice Haine of BestInvest by Evelyn Partners states: “Conflict in the Middle East has sent energy prices soaring, creating an inflationary headwind which may cloud the outlook for interest rates, just at a point when borrowing costs had eased into more palatable territory.
“The Bank of England had been expected to cut interest rates at its next Monetary Policy Meeting on March 19, supported by easing inflation, concerns over rising unemployment and sluggish economic growth.
“However, fears are now mounting that rate cuts may be delayed, or worse, that the Bank may even need to raise rates again to counter a fresh inflationary shock driven by surging energy prices.
Mark Harris, chief executive of mortgage broker SPF Private Clients, comments: “Swap rates, which underpin the pricing of fixed-rate mortgages, have edged higher amid fears that rising prices will fuel inflation.
“Expectations of a near-term base rate cut, perhaps as early as this month, have substantially reduced.
“A number of lenders have already increased their mortgage rates to reflect higher Swaps and others are likely to follow suit in order to keep in line and protect service levels.
“Borrowers planning to take out a fixed-rate mortgage in the next few weeks or months may wish to secure a product now. This will give peace of mind, and if rates fall by the time you come to take out the mortgage, you should be able to switch onto a cheaper deal at that time.
“However, if rates have risen, you will be glad you took action when you did.”
