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Swap rates

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 11. January 2024

Interested to speak to brokers about swap rates as they have started to go up in recent days. 

  • Why have swap rates started going up? 
  • What impact may this have on pricing/lenders cutting rates? 
  • What advice would you give to borrowers?

7 responses from the Newspage community

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Mike Staton
Director at Staton Mortgages
These slight increases are nothing much to panic about. Lenders are still reducing fixed rates and i believe they will continue to do so. We have seen increased mortgage activity over December and January which is probably the main cause of the swap rates increasing. I still expect to see further rate reductions and a BBR decrease come May.
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Elliott Culley
Director at Switch Mortgage Finance
Swap rates fell sharply during December before plateauing in early January. There have been some slight rises but nothing large. Most mortgage lenders are still catching up since the December reductions so it is likely we won't see a stop in reductions just yet. We may see some lenders readjust their rates and increase them if they are receiving a lot of business and service levels start to be affected.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Whilst it is true that the drop in swap rates we've been seeing over recent weeks seems to have come to a grinding halt, the rises that have happened over recent days are tiny. I think it would be more appropriate to say that swap rates have plateaued for the moment, as the increases are so modest it almost feels unfair to call them such.
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Gary Bush
Financial Adviser at MortgageShop.com
Swap rates isn't a foolproof system, in our opinion, this is what happens when the market is worried about catching a cold by overexposing to the recent drops and it seems to be factoring in a margin for error. UK lenders will be spooked by this and we will see a pause in the downward activity to see what subsequently happens to swaps - if they settle or continue to fall all will be well. Our advice to clients has been to secure the best rate possible with lenders via your adviser and to allow them to refix a deal should a lower one appear and bank the existing fixed rate with the lender if they start to turn in the wrong direction, upwards.
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Amit Patel
Adviser at Trinity Finance
Swap rates have increased over the past few days due to the ongoing situation in The Red Sea. The longer this escalates we could see inflation rise over the coming months. Lenders will be monitoring the situation very closely and will adjust their rates accordingly. Advice to borrowers would be to grab the rates now as the rates could spike at any moment.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Whilst the trend on interest rates is that they'll probably go down over the year, it does seem like rates may have been cut by the big boys a little bit quickly. We may see a humanitarian (at least in the case for preserving brokers sanity) ceasefire in the ongoing mortgage rate war.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
The increases in swap rates are almost insignificant so let's not panic. Lenders have been reducing interest rates across the board to encourage business and it certainly seems to have worked in terms of stimulating enquiries early in the New Year. The advice to borrowers is as it should always be; pick the best deal for your current circumstances and preferences. We present the options, the customer makes the choice. It's hardly a headline-grabbing statement, but it's tried and tested and consumer confidence is at the heart of important borrowing decisions.