Jonathan Samuels, CEO of specialist lender, Octane Capital, believes that whilst the continuation of escalating tensions in the Middle East have driven a notable increase in swap rates and mortgage pricing in recent months, the broader lending landscape remains relatively stable when viewed over a longer timeframe.
Octane Capital analysed average daily swap rates since the start of the Iran conflict on 28th February 2026 and compared them to the equivalent period immediately prior. The firm also assessed average daily swap rates seen so far in 2026 and compared them to the same period in 2025.
The analysis shows that both 1 year and 5 year swap rates have increased considerably since the start of the Iran conflict, with the average daily 1 year swap rate rising by 0.56%, whilst the average daily 5 year swap rate has increased by 0.49%.
Geopolitical instability can drive volatility across global financial markets, particularly where investors become concerned about inflationary pressures, energy prices, and wider economic uncertainty. These concerns often influence government bond yields, which in turn impact swap rates and the cost of fixed-rate mortgage funding.
As a result, the recent escalation in tensions across the Middle East has contributed to a noticeable increase in funding costs for lenders, placing upward pressure on fixed-rate mortgage pricing.
However, despite this recent surge, the longer-term picture remains far more balanced.
Octane Capital's analysis of average daily swap rates between 1st January and 10th June shows that the average 1 year swap rate has actually fallen by -0.11% when compared to the same period in 2025.
Whilst the average 5 year swap rate has increased by 0.06% year-on-year, the movement is marginal when considered against the much larger increase seen since the start of the Iran conflict.
This suggests that recent movements in swap rates have been driven primarily by short-term geopolitical events rather than a fundamental deterioration in the wider lending environment.
Jonathan Samuels, CEO of Octane Capital, commented:
“Global events will always have a ripple effect across financial markets and the recent escalation in tensions across the Middle East is a prime example of how quickly sentiment can shift.
"We've seen a significant increase in swap rates since the conflict began and that has inevitably fed through into mortgage pricing, creating a less favourable environment for borrowers in the short term.
"However, it's important not to view these movements in isolation. Whilst recent months have seen considerable volatility, the longer-term picture shows that swap rates remain broadly in line with where they were this time last year.
"Markets will continue to react to geopolitical events, inflation data and central bank expectations, but borrowers should avoid reading too much into short-term movements. The underlying lending landscape remains considerably more stable than the day-to-day headlines might suggest.”
