New analysis from the Energy and Climate Intelligence Unit (ECIU) reveal a strong correlation between changes in global oil prices and UK mortgage rates over the past two years.
The ECIU found that monthly changes in oil prices and two-year fixed mortgage rates had a strong positive correlation of 0.71 between October 2024 and September 2026.
The findings come as the Bank of England raises interest rates amid inflationary pressures linked to the conflict in the Middle East, which has driven renewed volatility in global energy markets.
Commenting on the Bank of England’s decision to increase interest rates, Chris Jaccarini, Senior Economist at ECIU, said: “Today’s rate rise highlights how our dependence on volatile oil and gas markets is putting ever greater pressure on the cost of living, with higher oil and gas prices not only pushing up energy and food bills but increasingly driving inflation, interest rates and mortgage costs.”
Mr Jaccarini also warned that people on tracker mortgages will see their monthly repayments rise as the increase takes effect.
He explained further that higher energy prices are also pushing up the cost of “everyday essentials”.
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