Author: Ifthikar Mohamed

Yesterday, the Bank of England voted 9-0 to keep the Base Rate at 3.75%. While "no change"
sounds like stability, the tone was anything but.
The Governor confirmed that war in the Middle East has directly ignited UK inflation,
which climbed back to 3.5%. This is being compounded by global market forces;

In my 10+ years in the industry, I have seen this pattern before: Markets react first;
mortgage rates follow. Over the past few weeks, the "wait and see" approach has
evaporated. Borrowers are moving with informed urgency. Average rates have moved
to 5.28%, up significantly from the sub-4% levels seen earlier this year.

Global oil prices have surged past $100 per barrel, a level that often sends ripples through
financial markets.
While this might initially appear to affect only petrol prices and energy bills, the economic
impact can spread much further. Higher oil prices can influence inflation, central bank
policy decisions, and mortgage rates.

After a relatively calm start to 2026, the mortgage market has been hit by a sudden volatility
spike.
Rising energy prices linked to Middle East tensions have pushed swap rates higher, which
lenders use to price fixed mortgages. As a result, mortgage rates have moved back above 5%,
and lenders have started withdrawing products from the market.

Many UK homeowners secured mortgages during a period of record-low interest rates. In
2020 and 2021, borrowers with strong deposits could obtain five-year fixed mortgage deals
close to 1%.

As of March 2026, the Bank of England Base Rate stands at 3.75%. Prior to recent
geopolitical developments, markets were pricing in roughly a 50/50 chance of a rate cut at
the March 19, 2026 Monetary Policy Committee meeting.

For several years, renting appeared financially safer.
Mortgage rates peaked.
Stress testing tightened.
Borrowing power reduced.
But February 2026 looks very different.

For company directors, one of the most common questions when planning a property
purchase is:
Should I take more dividends, or will lenders recognise retained profits?