Could the conflict result in no rate cuts in 2026?

We do not know what is going to happen yet. Rates could go up, the war might stop and rates drop again as previously forecast. This is the issue with uncertainty. Either way, it makes sense to secure a mortgage rate if you are coming up to remortgage soon and swap to a cheaper one if and when it is available.

In the short term any talk of base rate cuts will be null and void, assuming the conflict does sort itself out in the next few weeks this will be a temporary position, but if it continues beyond Easter, then yes it is possible that inflation and base rate will be adversely affected - with mortgage rates priced on the expectation of market improvements, that will put the breaks on rate cuts and unfortunately more deals will be more expensive. This just shows how important it is to engage with your mortgage broker, be document-ready, and be able to decide quickly on your next deal.

This time last week, traders were pricing in an 86% chance that the Bank of England would cut UK interest rates by 0.25 at their next meeting on 19 March. A week later, the escalating Middle East conflict has fundamentally shifted the UK economic outlook for 2026, and traders are now pricing in less than a 5% chance of a move this month. With 2-year gilt yields hitting December highs due to a 40% surge in UK gas prices and oil nearing $80, the Bank of England faces a significant "inflationary shock." For the property market, this means immediate pressure. High-street banks are no longer competing on price but are instead protecting margins against rising swap rates. Buyers may see "best-buy" deals pulled with only a few hours' notice as lenders move to price in the geopolitical risk premium.

Markets have moved quickly, but mortgage pricing reacts to sustained trends not single sessions.
Rising gilt yields and reduced rate-cut expectations will feed into swap rates, which means lenders will reassess pricing. The immediate impact on the property market is sentiment. Buyers may pause, especially at higher LTVs, but this doesn’t automatically mean a sharp slowdown.
Lenders are far better prepared than in 2022. Back then, funding costs moved disorderly and fast. Today’s move looks more like volatility driven by inflation expectations. If yields stay elevated for several days, we could see short-notice repricing or selective withdrawals. If this retraces, lenders will prioritise stability.
The key question isn’t today’s spike it’s whether it sticks.
For borrowers, the message is simple: if you have an offer on the table, don’t assume rates will drift lower. Volatility changes sentiment quickly and lenders can reprice faster than buyers expect.