Rising swap rates and Iran conflict uncertainty are leaving mortgage clients hesitant to commit, one broker warns
Global economic chaos and continuing uncertainty about the inflation outlook amid the Iran war have pushed interest rates higher in recent months – and that appears to be keeping plenty of potential homebuyers on the sidelines.
Hopes were high at the beginning of the year that 2026 would bring meaningful rate reductions, with the Bank of England opting in January to lower its base rate. Markets priced in further cuts, and by February sub-4% five-year fixes had returned for lower loan-to-value borrowers.
That picture shifted sharply in late February and early March, with the escalation of conflict involving Iran putting upward pressure on oil and gas prices, stoking inflation fears and pushing swap rates higher. The average two-year fixed rate deal now stands at 5.79%, up from 4.83% at the start of March, with the average five-year deal at 5.69%, up from 4.95%.
"Challenge-wise, the biggest issue right now is just clients being slower to make decisions because rates are higher than they expected,” Rhys Edwards, mortgage consultant at Brooks Financial, told Mortgage Introducer.
“They're taking more time to decide whether they're going to move or do things. I'm sending more quotes out and having to requote a few times, while clients are thinking about what they're going to do.”
The state of the market
Edwards said the impact is most visible in the purchase market, where both buyer and seller activity have softened. Remortgage business, he said, remains relatively steady, but new instructions and buyer enquiries have fallen away.
He said lenders themselves have been responding well operationally, and the challenge was less about product availability than client confidence. Buyers who had expected rates to continue falling are now pausing, reassessing, or waiting to see whether the Bank of England's next move brings any relief.
Navigating client hesitation
Rather than pushing clients towards a decision, Edwards said his approach focuses on providing clarity on the options available and ensuring clients understand the implications of each.
He also frequently uses historical rate data to give context on where rates had been and where they might go, while being clear about the limits of any such analysis.
For clients drawn to longer-term fixed rates as a means of managing uncertainty, he said it’s important they understand the trade-offs involved, including the risk of missing out on lower rates if conditions improved before their deal ended.
“It's about reassurance – where they are, and what they need to do,” said Edwards. “Recommending products that meet their situation and make them feel as comfortable as possible with what's available. We don't have a crystal ball."
Rate relief on the horizon?
On whether the Bank of England might cut rates before year-end, Edwards said the picture remains difficult to read. CPI inflation stood at 3.3% in the 12 months to March 2026, above the Bank's 2% target, with the Monetary Policy Committee (MPC) voting eight to one to hold the base rate at 3.75% at its April meeting. Following that decision, the MPC signalled higher inflation was likely ahead, with traders pricing in the possibility of rate hikes later in the year.
Edwards doesn’t expect reductions in 2026 if conditions remain broadly the same, while he also doesn’t anticipate increases unless the inflation picture changes materially. He said the next MPC meeting in June is unlikely to bring movement unless something significant shifts in the interim.
Advice for buyers sitting on the fence
For clients weighing up whether to proceed in the current environment, Edwards said the decision ultimately comes down to individual circumstances rather than any broader market call.
He said there is rarely a moment that feels unambiguously right to buy or sell and trying to time the market often leads to inaction that doesn’t serve clients' longer-term interests. If the finances work and the move makes sense for the client's situation, there is no fundamental reason to hold back, he said. Equally, for those who feel the cost is too high or the timing is wrong, waiting remains a legitimate choice.
"It has to work for you as a client," said Edwards. "That's the best advice I could give to anybody."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
