Oil Prices, Mortgage Rates and the UK Property Market
A client asked us recently what impact the escalating situation involving Iran might have on the UK property market. It is a good question, and the honest answer is that the main area to watch is interest rates.
How Mortgage Markets Had Been Improving
Over the past six months, mortgage markets had been gradually improving. Swap rates, which largely determine the cost for lenders to offer fixed-rate mortgages, had been trending downwards. That allowed lenders to slowly reduce mortgage rates and helped support buyer confidence across the housing market.
What Has Changed in the Last Week?
Following the escalation of conflict involving Iran, global oil prices have risen. Higher energy costs can feed into inflation because fuel, transport and production costs increase across the wider economy. When inflation risks rise, financial markets often assume central banks may need to keep interest rates higher for longer in order to keep inflation under control.
Those expectations quickly influence swap rates, which are the funding benchmark lenders use when pricing fixed-rate mortgages. When swap rates move up, mortgage rates can follow.
Key figures to note: Five-year swap rates have risen by around 0.2% over the last seven days, moving from 3.9% to 4.1%. They are now back to levels last seen in March 2025. While that might sound significant, they are still a third lower than the levels seen in the summer of 2023, when swap rates stood at around 5.3% in June of that year.
As a result, some lenders have already nudged their five-year mortgage rates up by 0.1% to 0.2%. To put that into practical terms: on a £200,000 mortgage, a 0.2% increase would equate to an additional £33 per month.
The Housing Market Continues to Function Well
It is important to put this into perspective. The housing market itself continues to function well. Some 25,603 homes sold last week across the UK, which is 5.13% higher than the 2026 weekly average. Buyers are still buying and homes are still selling. The recent movement in swap rates does not fundamentally change the direction of the property market.
Why Pricing Realism Matters More Than Ever
What recent events do highlight is something that has always been true: pricing realism remains essential. Across the long term, the data shows that only 53.5% of homes that come onto the market go on to sell. The difference between those that sell and those that sit unsold is very often pricing.
Homes launched with realistic, evidence-based asking prices attract viewings and offers. Homes that come to market with expectations that stretch beyond current market conditions can take considerably longer to find a buyer. While the housing market remains active, sensible pricing remains the key factor in ensuring a successful move.
Homes that are priced correctly continue to sell well. Those chasing yesterday’s market often take much longer to find their buyer.
Thinking of selling your home in Warrington?
At Courtyard Homes, we specialise in helping families buy, sell and rent homes in Warrington and the surrounding areas. We provide expert guidance, high-quality marketing, and skilled price negotiation to help you achieve the best possible outcome.
Get in touch with our team today:
Tel: 01925 767000 | ask@courtyardhomes.co.uk