Jonathan Samuels, CEO of specialist lender, Octane Capital, has highlighted that whilst the conflict in the Middle East is having a short-term impact on the UK mortgage market, the overall lending landscape remains more favourable for borrowers than it was this time last year, with swap rates still lower on a year-on-year basis despite recent increases.
Octane Capital analysed the average daily swap rates seen since the start of the Iran conflict on 27th February and compared these to the equivalent period prior, as well as assessing the average daily swap rates seen so far in 2026 versus the same period in 2025.
The analysis shows that both 1 year and 5 year swap rates have increased since the start of the Iran conflict, with the average daily 1 year swap rate rising by 0.26%, whilst the average daily 5 year swap rate has increased by 0.22%.
Geopolitical instability, particularly in the Middle East, can drive volatility across global financial markets, with investors often reacting to increased uncertainty around inflation, energy prices, and economic stability. This can lead to movements in government bond yields, which in turn influence swap rates and the pricing of fixed-rate mortgages.
However, despite these recent increases, the broader mortgage landscape remains in a stronger position than it was this time last year.
Octane Capital’s analysis of average daily swap rates between 1st January and 16th March shows that the average 1 year swap rate has fallen by -0.59% compared to the same period in 2025, while the average 5 year swap rate is down -0.30% year-on-year.
These reductions are notably larger than the increases seen since the start of the Iran conflict, highlighting that recent upward movement in swap rates represents a short-term reaction rather than a reversal of the wider downward trend seen across the mortgage market.
Jonathan Samuels, CEO of Octane Capital, commented:
“Global events will always have a ripple effect across financial markets, and the recent escalation in tensions in the Middle East is no exception, with swap rates reacting accordingly in the short term.
Given this recent upward movement, it would be no surprise to see the Bank of England hold the base rate in the near term as it assesses the wider impact of these developments, however, it’s important to keep this movement in context.
While swap rates have edged up in recent weeks, they remain notably lower than they were at the same point last year, and this is what continues to support a more favourable borrowing environment overall.
Short-term fluctuations will always occur, particularly in response to geopolitical events, but the underlying trajectory of the market remains far more stable and supportive than it was this time twelve months ago.”
