If you've been following the news this week, you'll have seen headlines about rising oil prices and tensions in the Middle East. On the surface, it seems far removed from your mortgage application or house sale. But global energy markets have a direct line to your wallet, and understanding that connection helps you make better decisions about timing and borrowing.
Oil prices hit $89 per barrel this week, marking six consecutive sessions of gains. The spike stems from geopolitical friction over shipping routes in the Middle East. When oil gets expensive, it filters through the economy in ways that affect everyone, not just drivers filling up at the petrol station.
How oil prices influence your mortgage rate
Energy costs feed into inflation figures. When petrol, heating oil and transport costs rise, they push the broader cost of living upwards. The Bank of England watches inflation closely and uses it to set the base rate, which currently stands at 3.75%.
Higher inflation can delay interest rate cuts. Lower rates would normally help borrowers, making mortgages cheaper and more affordable. But if energy prices stay elevated and inflation refuses to fall back towards the 2% target, the Bank of England may hold steady on rates for longer than hoped. The current average 5-year fixed mortgage rate sits at 4.79%, whilst 2-year deals average 6.6%. That's still high compared to pre-pandemic levels, and sticky inflation is one reason why.
This matters more if you're planning to switch mortgages or remortgage soon. A delay in rate cuts could mean paying more than you'd budgeted for, or having to stretch your finances further to meet monthly payments.
Sellers and buyers react differently
Rising mortgage costs tend to cool buyer demand. When people realise their monthly payments will be higher than expected, some pull out of the market entirely. Others delay their purchase until they've saved a larger deposit or rates fall.
This creates a mixed picture for sellers. Fewer active buyers means less competition for your property, but it also means longer time on the market. At current levels, UK house prices have risen just 2.7% annually, suggesting the market isn't racing ahead. If you're selling, this is actually useful intelligence. Overpricing your home becomes even riskier when fewer people are looking to buy.
For buyers, the picture is more nuanced. Reduced competition from other purchasers can work in your favour. Some sellers are more willing to negotiate when properties are taking longer to shift. You've got more room to make an offer and walk away if the numbers don't add up.
What you should do right now
If you're thinking about buying a home and you're currently on a variable rate or nearing the end of a fixed deal, don't wait for certainty that never arrives. Energy markets are unpredictable, and geopolitical events can change rapidly. Instead, focus on what you can control.
Get a mortgage in principle from your lender. This shows sellers you're serious and gives you clarity on what you can actually afford. When rates remain uncertain, knowing your exact borrowing capacity removes one layer of anxiety from the process.
If you're remortgaging soon, shop around for deals now rather than waiting. Locking in a rate removes the guesswork about where prices are heading. The Bank of England's next moves remain data-dependent, and oil price volatility makes forecasts hazardous.
Sellers should get a realistic valuation of their property and price competitively from the start. With fewer buyers actively searching, the margin for error is smaller. Overpriced homes simply sit on the market collecting viewings that don't convert to offers.
The longer view
Geopolitical tensions come and go. Oil prices spike and retreat. What matters for your property plans is having a sensible strategy that works across different scenarios, not betting everything on energy prices falling or rates dropping soon.
The UK property market at an average price of £271,295 remains fundamentally sound. People still need homes, and most mortgages are still affordable for those in work. Energy price movements are real but not catastrophic for the housing market itself.
Keep an eye on inflation and rate forecasts, certainly. But don't let global news cycles paralyse your plans. If buying makes sense for your circumstances and you can afford the payments at today's rates, these external factors shouldn't necessarily stop you. Similarly, if selling is right for your life situation, don't hold out forever waiting for perfect market conditions that may never arrive.
The best time to move is when it aligns with your needs, not when headlines feel most comfortable.