Three weeks ago, traders were pricing an 86% chance the Bank of England would cut interest rates today.

As of this morning, that probability has collapsed to less than 5%.

What happened? Iran.

On 10 March, US and Israeli military operations triggered a sharp escalation in Middle East tensions. Oil prices surged above $100 per barrel. UK wholesale gas prices jumped around 40% in days. For a Bank of England already wrestling with sticky inflation at 3.4% — well above its 2% target — an external energy shock was the last thing policymakers needed.

The gilt market reacted immediately. The UK 10-year gilt yield, which had been drifting back toward 4.35%, spiked to 4.78% — a six-month high — within a week. Because fixed mortgage rates are priced off gilt yields and swap rates, lenders repriced almost overnight. The average two-year fix crossed back above 5% for the first time since August 2025. Nearly 500 mortgage products were pulled from shelves in 48 hours — the most turbulent period for the mortgage market since the September 2022 mini-Budget.

What the Bank is likely to decide today

The MPC is almost certain to hold rates at 3.75%. The more interesting question is the vote split. At February's meeting, the committee voted 5–4 to hold, with four members pushing for an immediate cut to 3.5%. If the split narrows today — say 7–2 or 6–3 in favour of holding — it signals that geopolitical uncertainty has genuinely changed the committee's outlook, not just delayed a cut. Markets are now even pricing a small probability of a rate rise by year end — a remarkable reversal from just weeks ago when two cuts were fully expected.

What this means for you

If you have a fixed rate expiring in the next six months, do not wait for rates to fall. Secure a deal now — mortgage offers last 3–6 months, and if rates drop before completion, most lenders will let you rebook at the lower rate. The risk of waiting and rates rising further is real and immediate. If you're already on your lender's Standard Variable Rate, you are currently paying an average of 7.13%. That is nearly double the best available fixed deals. Switching should be urgent.

While most of the mortgage market attention this week has focused on Iran and the Bank of England, there is a slower-burning story that deserves more scrutiny. It concerns private credit — a largely unregulated $2 trillion global lending market — and what happens to UK housing supply if it seizes up.

What is private credit and why does it matter for property?

After the 2008 financial crisis, tighter capital rules forced high street banks to pull back sharply from riskier lending. The gap was filled by private credit funds — specialist lenders operating outside the traditional banking system, providing development finance, bridging loans, and construction funding directly to property developers. Today, private credit has become one of the largest alternative sources of property finance in the UK. Smaller developers, in particular, rely on it heavily — and those smaller developers contribute nearly 40% of the UK's new housing supply.

When private credit flows freely, it quietly keeps the housing pipeline moving. When it doesn't, the effects show up months later as fewer planning approvals turning into completed homes.

The warning sign: Market Financial Solutions

In late February, a relatively obscure UK bridging lender called Market Financial Solutions entered insolvency. The immediate cause was a discovery that some of its property-backed collateral may have been pledged multiple times to different creditors — a practice known as double pledging. Creditors including Barclays, Santander, Jefferies, and funds linked to Apollo Global Management had extended roughly £2 billion in financing. The collateral shortfall is estimated to be approaching £930 million.

The collapse rattled global financial markets. Barclays and Jefferies shares fell. Apollo's UK affiliate disclosed roughly £400 million of direct exposure. The episode brought back uncomfortable comparisons to the early stress signals that preceded the 2022 US regional bank failures — not a crisis in itself, but the kind of event that reveals how quickly confidence can evaporate when opacity, layered leverage, and short-term funding collide.

This is not an isolated incident

The MFS collapse sits within a broader pattern of stress across the private credit sector. Blue Owl, one of the largest US private credit managers, gated withdrawals from a retail credit vehicle in February 2026. An Apollo-managed business development company cut its dividend and marked down assets the same month. Before those, Thrasio's bankruptcy in 2024 and First Brands' alleged collateral double-pledging in early 2025 raised similar concerns. As Bloomberg noted this week, private credit has entered what it described as its "musical chairs phase" — a point in the cycle when problems start surfacing as the music slows.

The global private credit market has grown from approximately $200 billion in 2009 to an estimated $2 trillion today. It now plays a major role in financing UK businesses and property development. But it is largely opaque, largely unregulated, and deeply interconnected with the very banks that were supposed to have stepped back from these risks after 2008.

What the Bank of England is watching

The Bank is not ignoring this. In December 2025, it launched a system-wide exploratory stress scenario exercise specifically designed to assess how private credit markets might behave under severe conditions — and what the wider implications for UK financial stability might be. Blackstone, Apollo, and KKR are among the major players signed up to participate. Results are expected during 2026, with a final report due in early 2027.

The House of Lords Financial Services Regulation Committee went further in January 2026, publishing a report titled "Private Markets: Unknown Unknowns." The committee's conclusion was stark: there is insufficient data to determine whether private credit poses systemic risk to the UK economy. Lord Forsyth, the committee chair, warned that there were "too many unknown unknowns" — and that regulators needed to be far more proactive.

The housing supply chain reaction

Here is how a private credit crunch flows through to the UK housing market, step by step:

This is not a scenario that unfolds overnight. But the seeds are already being planted. And in a market where the government's housebuilding ambitions depend heavily on SME developers with access to alternative finance, the health of private credit is not just a City story — it is a housing story.

What to watch

The Bank of England's stress test results, expected later this year, will be the first real window into how exposed the UK financial system actually is. Until then, the honest answer is that nobody knows for certain — which is itself the concern.

What's driving it: The gilt yield hit 4.78% last week — its highest since September — as oil prices surged on Middle East escalation. It has eased slightly to ~4.65% this week after Trump suggested the conflict "could end quickly" and oil pulled back from its peak. But it remains well above where it was a month ago, keeping pressure on swap rates and mortgage pricing.

The private credit connection: Rising gilt yields make it more expensive for private credit funds to borrow and refinance. This adds another layer of pressure on development lenders at exactly the wrong moment.

Watch this number every week. It tells you where your mortgage rate is heading before your lender does.

Data: Moneyfacts/Rightmove, 18 March 2026

Manchester has quietly become one of the most watched property markets in the UK — and the data is starting to justify the attention.

The numbers: Greater Manchester has outperformed the national average on price growth for three consecutive years. Salford, in particular, has seen significant movement as buyers priced out of the city centre look outward.

Why it's moving: Manchester has one of the highest proportions of under-35s of any UK city outside London. The University of Manchester and MMU together produce tens of thousands of graduates annually, many of whom stay — creating sustained rental demand and a steady pipeline of first-time buyers.

Buy-to-let angle: Rental yields in Manchester city centre average 5–6%, well above London (typically 3–4%). With rental supply still 23% below pre-pandemic levels nationally, well-located Manchester properties remain attractive for investors — though the Renters' Rights Act arriving on 1 May changes the management landscape significantly.

The private credit angle here too: Several major Manchester regeneration schemes rely on bridging and development finance from alternative lenders. If private credit tightens, some of those schemes could slow or stall — which would affect both housing supply and investment returns in the city.

Next week: Yorkshire & Humber — revisited with the latest price data

The Renters' Rights Act comes into force on 1 May 2026. Here is what landlords need to do now:

This week: "I'm a first-time buyer with a 10% deposit on a £280,000 property. Should I buy now or wait for rates to fall?"

At 90% LTV on £280,000, you're borrowing £252,000. At today's average two-year fix of ~5.01% over 25 years, your monthly repayment is approximately £1,470. If rates fell to 4.25% — possible by end of 2026 — that drops to around £1,360. A saving of £110/month.

The question is whether that saving is worth the risk of house prices rising in the meantime. With stock at an 11-year high and sellers under pressure to reduce prices, 2026 is one of the better buyer's markets in a decade. You have choice and negotiating power. If you've found the right property and can afford today's payments, buying now with a two-year fix and remortgaging when rates fall gives you the best of both worlds.

Educational purposes only — not financial advice. Always consult an FCA-regulated mortgage broker.

1. 472 Mortgage Products Pulled in 48 Hours The Middle East conflict sent swap rates surging, causing lenders to rapidly reprice. Moneyfacts recorded 472 residential mortgage product withdrawals in a single 48-hour window — around 6.5% of the entire market — the largest pull since the 2022 mini-Budget. The one-year market expectation for Bank Rate moved from 3.42% to 3.87% in a single week. For anyone approaching a remortgage: act now, not later. Source: Moneyfacts, March 2026

2. Rental Market Cooling — But the Squeeze Isn't Over Zoopla's March rental report shows UK rent growth has slowed to 1.9% annually, down from 2.8% a year ago. Average rent for new lets now stands at £1,319/month. Competition per property has fallen to 4.8 enquiries — the lowest in six years. However, rental supply remains 23% below pre-pandemic levels, meaning rents will keep rising — just more slowly. Northern cities including Liverpool, Newcastle and Glasgow are still seeing the strongest growth at 3–4.6%. Source: Zoopla Rental Market Report, March 2026

3. Mortgage Approvals Down 10% Year-on-Year The Bank of England recorded 59,999 mortgage approvals in January 2026 — down 10% on January 2025 and 2% below December 2025. The January 2025 figure was elevated by buyers rushing ahead of the Stamp Duty deadline. The underlying picture is steady but cautious, with sales agreed currently running just 2% behind the strong pace of early 2025. Source: Bank of England / House of Commons Library

With rates moving sharply this week, now is exactly the time to run your numbers. Monthly payment, LTV position, stress test at +3%, and what happens when your fixed deal ends.

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UK Property Pulse sends every Thursday at 7:30am. Subscribe: ukpropertypulse.co.uk/subscribe Contact: [email protected] UK Property Pulse is not authorised or regulated by the FCA. Nothing in this newsletter constitutes financial advice. Always consult a qualified, FCA-regulated mortgage broker before making mortgage decisions.

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