HSBC and Coventry Building Society Increase Fixed Mortgage Rates
HSBC and Coventry Building Society have become the first major lenders to announce rate hikes on fixed mortgage deals, a move attributed to the escalating crisis in the Middle East. Brokers predict that other financial institutions are likely to follow suit in the coming days, creating a volatile environment for borrowers.
Impact of Middle East Tensions on UK Mortgage Market
Experts have warned that the conflict between Iran and other nations could trigger an energy price shock, which would push up inflation in the United Kingdom. This, in turn, may force the Bank of England to increase interest rates, adding pressure on mortgage costs. The uncertainty has already affected money market swap rates, which lenders use to determine pricing for new fixed mortgages.
Aaron Strutt, a broker at Trinity Financial, commented: "HSBC and Coventry are the first big lenders to announce rate hikes based on the funding cost increases brought on by the chaos in the Middle East." He added: "It seems almost certain we are going to see a lot more rate changes over the coming days, so if you are on the hunt for a mortgage, it is worth locking into a new deal now."
Details of the Rate Increases
HSBC confirmed that it will increase rates on a large number of its residential and buy-to-let mortgage deals, effective from Friday. At the time of writing, the new pricing details were not yet available. Coventry Building Society announced that new rates will take effect from Monday, 9 March, with increases applying to all fixed rates for both new and existing borrowers.
These developments come as a blow to homebuyers and those looking to remortgage. Approximately 1.8 million fixed-rate mortgage deals are set to expire in 2026, meaning a significant number of borrowers will need to secure new home loans in a potentially higher-rate environment.
Broader Market Implications and Expert Analysis
David Hollingworth of L&C Mortgages noted: "We are now seeing the first big-name lender moves begin to feed through. Once we enter this cycle of lenders adjusting their rates, we know that it almost invariably results in others following suit." Adam Stiles at Helix Financial Partners echoed this sentiment, stating: "The stark reality of recent global events has hit markets with great uncertainty, which has translated into huge volatility in swap rates. Coventry and HSBC won't be the first lenders running for the hills and increasing rates."
Households had recently benefited from cheaper home loans after the Bank of England cut interest rates four times in 2025, bringing the base rate down to 3.75%. Until Friday, another rate cut this month had appeared very likely, but the current geopolitical tensions have shifted that outlook.
The warnings of higher mortgage costs underscore the fragile state of the UK housing market, with borrowers urged to act swiftly to lock in favourable deals before further increases are implemented across the industry.
