However, early momentum could be threatened by geopolitical tensions

The latest Halifax House Price Index shows average UK property values have stayed above £300,000 for a second straight month, highlighting the resilience of the housing market. However, early momentum could be threatened by geopolitical tensions.

Karen Noye, mortgage expert at Quilter, commented: The backdrop for buyers has become more complicated in just a few days. Hopes of a steadier rate environment have been disrupted by fresh instability following the war in Iran. While there will not be a sudden jump in mortgage rates lenders may pause planned reductions, with swap rates rising sharply as geopolitical tensions push up oil prices and revive inflation concerns. This shift makes it harder for households to judge when affordability will genuinely improve.

Although buyer interest has improved on last year, sentiment remains fragile, Noye added. Global uncertainty could slow the momentum that had been emerging, particularly if markets continue to expect firmer inflation. That would keep mortgage pricing stickier than borrowers hoped, limiting any meaningful uplift in demand. Much now depends on how quickly rate expectations stabilise. If swap rates calm and lenders regain confidence, competition could return, but the outlook is highly sensitive to global events.

Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, agrees that the housing market has a fresh challenge.

She commented: Conflict in the Middle East that has sent energy prices soaring, creating an inflationary headwind which may cloud the outlook for interest rates, just at a point when borrowing costs had eased into more palatable territory.

She said: The Bank of England had been expected to cut interest rates at its next Monetary Policy Meeting on March 19, supported by easing inflation, concerns over rising unemployment and sluggish economic growth – with the potential for further cuts later in the year. However, fears are now mounting that rate cuts may be delayed, or worse, that the Bank may even need to raise rates again to counter a fresh inflationary shock driven by surging energy prices.