Mortgage Rates Rise & Energy Bills Squeeze UK Households – March 2024

UK mortgage rates are rising, adding to the financial strain on households already grappling with elevated energy costs. Several major lenders increased fixed mortgage rates by up to 0.25% on Friday, March 6, 2026, a move brokers attribute to growing market volatility linked to geopolitical tensions in the Middle East.

Rate Increases and Market Reaction

The rate increases, impacting first-time buyers, home movers, and those remortgaging, come as swap rates – which underpin the pricing of fixed-rate mortgages – have climbed in recent days. On Thursday, the 2-year swap rate rose 7.5 basis points to 3.56%, while the 5-year swap rate increased 7.9 basis points to 3.70%. Babek Ismayil, CEO of homebuying platform OneDome, noted that seeing multiple lenders raise rates in a single day is unwelcome news for borrowers.

Adam Stiles, Managing Director of Helix Financial Partners, explained that the recent events have “spooked the markets,” driving swap rates higher. He anticipates further rate increases from other lenders until the situation stabilizes, though the timing remains uncertain.

Energy Costs Add to the Pressure

The increase in mortgage rates coincides with rising concerns about energy prices. Octopus Energy has introduced temporary exit fees for customers signing up to fixed-tariff energy plans, citing increased wholesale energy costs. Greg Jackson, CEO of Octopus Energy, explained via social media that the company is absorbing costs where possible, but cannot fully cover the expense of buying energy in advance for new fixed-tariff customers if they choose to leave the plan early. This move underscores how geopolitical instability is impacting household budgets beyond just mortgage payments.

Experts warn that disruption to shipping routes, particularly through the Strait of Hormuz, is sending wholesale energy prices soaring. This could fuel higher inflation, impacting not only mortgages but also savings and food costs.

Inflation and the Bank of England

The potential for increased inflation is also influencing expectations regarding future Bank of England policy. Ismayil suggests that the conflict in the Middle East could prove inflationary, potentially delaying anticipated rate cuts from the Bank of England. Inflation has “remained flat” at 3.8 percent, according to Sky News Business Reporter Edward Boyd.

Borrower Strategies and Market Outlook

Despite the rising rates, experts emphasize that competitive deals remain available. Justin Moy, MD of EHF Mortgages, advises borrowers to shop around and utilize a broker to secure the best possible rate, stressing that rates are not locked in until a full application is submitted. Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, echoes this sentiment, noting that the market momentum has shifted dramatically and borrowers need to be prepared.

Richard Davidson, a mortgage advisor at onlinemortgageadvisor.co.uk, believes the rate increases represent cautious repricing in the face of uncertainty rather than a definitive shift, pointing out that rates are still lower than the peaks seen in 2023. Mike Staton, director at Staton Mortgages, highlighted the direct link between global events and household finances, stating that the conflict is driving up oil and gas prices, contributing to higher inflation and borrowing costs.

Combined Financial Pressures

The combined effect of rising mortgage rates and potential increases in energy bills is creating a challenging financial environment for UK households. Greg Marsh, CEO of AI money-saving platform Nous.co, notes that while energy bills are expected to fall in April due to the Ofgem price cap, higher wholesale costs could lead to increases later in the year. He advises households to monitor fixed-deal energy prices closely.

The situation serves as a reminder of how global events can directly impact personal finances. Nationwide’s rate rise is a signal for borrowers to remain vigilant, review mortgage deals, consult with brokers, and plan for potentially higher monthly costs while also monitoring energy bills.

According to Barclays, spending on rent and mortgages increased by 5.4% in March 2025 compared to March 2024, indicating the growing financial burden on households.