Nobody expected a war in the Middle East to become the defining financial story of 2026. But here we are — oil above $100 a barrel, petrol at 157p per litre, and the Bank of England watching inflation tick back toward 4%. If you have a mortgage coming up for renewal this year, this is the moment to pay attention.
The rate picture has changed dramatically
As recently as January, markets were pricing in two Bank of England rate cuts in 2026. That consensus has completely reversed. Economists are now pricing in three rate increases, driven by energy-led inflation. The Nationwide has already reported that about 1.3 million UK homeowners could see their mortgage payments rise by the end of 2028 as a direct consequence of the conflict.
The mechanism is straightforward: higher oil prices push up energy bills, which drives headline inflation, which forces the Bank of England to keep rates higher for longer. For anyone on a tracker mortgage or coming off a fixed deal, that translates directly into a larger monthly payment.
What this means if you are remortgaging in 2026
If your fixed rate ends before December, you are in the most time-sensitive position. The window to lock in a competitive deal may be narrowing as lenders reprice their products upward. The typical advice in this environment is to start the remortgage process at least six months early — most lenders will allow you to secure a rate now and draw it down when your current deal ends.
Three things to do right now
- Check your deal end date today. If it is within 12 months, speak to a broker immediately.
- Model a 1% rate increase on your current balance. If that would stretch your budget, consider overpaying now.
- Do not assume the conflict will resolve quickly. The IMF projects elevated inflation through most of 2026.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult a qualified mortgage adviser before making decisions.
