Mortgage lenders may be forced to raise prices after the Iran conflict caused gilt yields to rise overnight, experts say.

The US and Israel began a series of strikes on Iran on 28 February, with the conflict spreading to include Iranian attacks on multiple Gulf countries.

Gilt yields moved in response, with five-year gilts up around 19bps today, the two-year up around 12bps and the 10-year up about 14bps.

One lender due to make rate cut announcements this morning has already told Mortgage Strategy it is carrying out emergency repricing.

John Charcol mortgage technical manager Nick Mendes said: “In other words, funding costs have pushed north again, and that matters for mortgage pricing.

“The next MPC meeting is 19 March. In a fast-moving, unpredictable backdrop, the picture could look materially better by then, or it could deteriorate further. Either way, a near-term [Bank of England base rate] cut is now clearly less likely than it was even a week ago.

“Santander’s cuts today will have been signed off last week before this latest jump in yields fed through. With uncertainty higher and wholesale funding costs rising, it would not be surprising to see lenders turn more defensive.”

Mendes added that rates could rise by more than any change in funding costs, as lenders can become more defensive when visibility worsens.

He said: “So, the message for anyone needing a new rate, particularly those coming off a fix, is straightforward: don’t sit on it. If you’re in window, secure a new fix as soon as you can. A broker can still help you lock something in and keep options open if pricing improves again before completion.”