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European bond market turmoil eases as oil falls
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The gist
European bond market turmoil eases as oil falls to $94.57 a barrel.
UK mortgage rates may rise as swap rates hit three-year high.
Background
This week's global bond sell-off, driven by inflationary pressures from high oil prices, has pushed up bond yields. The drop in oil price has cooled the bond market turmoil for now, but the rise in UK swap rates – the rates banks charge each other – is expected to lead to higher fixed-term mortgage rates.
How it unfolded
- Wed, 02 Sep 2026Oil traded as high as $97/barrel, contributing to bond market sell-off and pushing UK 10-year gilt yield to its highest since 2008.
- Thu, 03 Sep 2026 08.55 CESTGuardian business live opens with warning that UK mortgage rates are set to rise as swap rates hit three-year high.
- Thu, 03 Sep 2026 09.02 CESTOil price drops 1.1% to $94.57 a barrel, helping ease the bond market wobble.
Who’s saying what
- Analysts
- Russ Mould of AJ Bell says credit card, mortgage and auto loan rates will rise if bond yields rise, as lenders seek to preserve margins.
- Official
- Tom Simpson of Yorkshire Building Society says a modest increase in mortgage rates is expected, but the move is less severe than in March.