Market Movements

BoE Rate Decision Preview: Why March 2026 Could Be a Turning Point for Mortgage Borrowers

With the MPC meeting on 18 March approaching, escalating Middle East tensions and surging oil prices have thrown rate cut expectations into doubt. Here is what the data says and what it means for your mortgage.

Published 14 March 2026

Reviewed by RateWatch.ukMortgage rate analysis reviewed before publication.

Markets Brace for a Hawkish Hold

Just weeks ago, markets were pricing in a near-certain 25 basis point cut to the Bank of England base rate at the March MPC meeting. That expectation has evaporated. Conflict in the Middle East — specifically disruption to oil and gas supplies through the Strait of Hormuz — has sent Brent crude above $95 a barrel and two-year swap rates sharply higher.

Swap rates are the wholesale funding costs that underpin fixed mortgage pricing. When they rise, lenders follow. The two-year SONIA swap, which was around 3.75% in late February, has climbed past 4.1% — a move of roughly 35 basis points in under three weeks.

What This Means for Mortgage Rates

The knock-on effect is already visible. Several major lenders have repriced upwards in the first two weeks of March:

Nationwide increased selected fixed rates by up to 0.20% on 6 March, with their 2-year fix at 75% LTV moving to 3.94%
NatWest raised its 2-year fixed remortgage at 60% LTV to 4.32%, up 35bp from 3.97%
Barclays lifted its residential range by 0.15% across the board

The era of sub-4% fixed rates appears to be ending, at least temporarily. Borrowers who locked in during the January–February window are looking increasingly well-timed.

BoE Decision Day: 18 March

The MPC faces a dilemma. Domestic inflation was on a downward trajectory, and the labour market has shown signs of cooling — both arguments for continuing the easing cycle. But imported energy price shocks complicate the picture significantly.

The Bank's mandate is price stability. If CPI is now expected to climb back toward 3–3.5% over the next two quarters (as early estimates suggest), holding at 3.75% is the prudent call — and that is exactly what markets are now pricing.

Tracker Mortgages: The Hidden Winners?

While fixed rates have risen sharply, tracker mortgage pricing has been more stable. The base rate itself has not changed, so existing tracker borrowers are unaffected. New tracker deals remain available from around 3.55% (Barclays base + spread at 75% LTV), making them competitive versus 2-year fixes now priced above 4%.

The risk, of course, is that the BoE could raise rates if inflation proves sticky — a scenario that seemed unthinkable a month ago but is now being discussed seriously in the City.

What Should Borrowers Do?

If you have a mortgage deal expiring in the next 3–6 months, the window for the very lowest fixed rates has likely closed. However, rates are not dramatically high by historical standards. A 2-year fix around 4.5% with a rate review in 2028 may still prove sensible if inflation forces the BoE to pause its cutting cycle for several quarters.

For those comfortable with some risk, tracker deals offer immediate savings of 40–60 basis points versus equivalent fixes — but with no protection if rates rise.

Frequently Asked Questions

Will the Bank of England cut rates in March 2026?

Markets are now pricing a hold at 3.75% at the 18 March meeting, reversing earlier expectations of a cut, due to rising energy prices from Middle East tensions.

Why are mortgage rates going up when the base rate has not changed?

Fixed mortgage rates are driven by swap rates (wholesale funding costs), not directly by the base rate. Swap rates have risen 35bp in March as markets price in higher future inflation from surging oil prices.

Should I lock in a fixed rate now before they rise further?

If your deal is expiring soon, acting sooner rather than later may be prudent as the trend is clearly upward. Most mortgage offers can be held for 3–6 months, giving you a rate guarantee even if prices continue to climb.