HSBC and Coventry building society are the first major UK lenders to announce they are raising rates on their fixed mortgage deals following the Middle East crisis, and brokers predict others are likely to follow suit.
Experts have said the war could trigger an energy price shock that drives up UK inflation, which in turn could force the Bank of England to raise interest rates.
That uncertainty has affected the money market swap rates that lenders use to decide rates on their new fixed mortgages. Aaron Strutt, of broker Trinity Financial, said: “HSBC and Coventry are the first major lenders to announce rate rises based on rising funding costs caused by chaos in the Middle East.”
He added: “We look almost certain to see many more rate changes in the coming days, so if you’re looking for a mortgage, it’s worth striking a new deal now.”
HSBC said it would increase rates on a large number of its residential and buy-to-let mortgage deals from Friday, although at the time of writing the new price was not available.
Coventry Building Society said its new rates would come into effect from Monday. It said it would increase all fixed rates for new and existing borrowers.
Warnings about higher mortgage costs deal a blow to homebuyers and those looking to remortgage. Around 1.8 million fixed-rate mortgage deals will end in 2026, and most of these borrowers will need to take out a new home loan.
Households have benefited from cheaper home loans in recent months after the Bank of England cut interest rates four times in 2025 to reduce the base rate to 3.75%, and until Friday another rate cut this month looked very likely.
David Hollingworth, of broker L&C Mortgages, said: “We are now seeing the first moves from reputable lenders starting to come through… Once we get into this cycle where lenders adjust their rates, we know that almost invariably results in others following suit.”
Adam Stiles of broker Helix Financial Partners agreed that other lenders are likely to announce higher costs. “The harsh reality of recent global events has hit markets with great uncertainty, resulting in huge volatility in swap rates. Coventry and HSBC will not be the first lenders running for the hills and raising rates,” he said.
