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"Better times may be on the way" for borrowers as 2-year swap dips back under 4%

ended 26. February 2025

Sonia swaps have been heading south again over the past day or so, with the 2-year back under 4%, potentially signalling cheaper mortgage rates ahead. Newspage asked brokers for their views on what's happening and whether lenders could react.

9 responses from the Newspage community

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Pete Mugleston
Mortgage Advisor & Managing Director at onlinemortgageadvisor.co.uk
The recent dip in Sonia swaps, particularly the 2-year falling below 4%, is an encouraging sign for mortgage borrowers. If this trend continues, lenders could adjust their rates downward in the coming weeks. While some may wait for sustained stability, others looking to stay competitive might act sooner. That said, lenders factor in more than just swap rates, including funding costs and risk appetite. If this trend continues, we’re likely to see further reductions in mortgage rates, but the timing will vary between lenders. Borrowers currently on the fence about fixing may benefit from holding off slightly to see how the market responds.
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Riz Malik
Independent Financial Adviser at R3 Wealth
There seem to be some decent reductions in the market that impacts fixed rate mortgage pricing over the past 48 hours off the back of gilt yields. Lenders will be watching this closely and if this trend continues we could see a welcome and fresh wave of rate cuts.
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Jamie Elvin
Director at Strive Mortgages
Swap rates are sliding and borrowers should take note. The 2-year swap has dipped below 4% once again, reinforcing hopes of cheaper fixed-rate mortgage deals in the near future. Lenders have been hesitant to make bold moves, but with sustained reductions across swap rates—especially in the 2-, 3-, and 5-year terms—competition could start heating up. If this trend continues, we may see a fresh wave of rate cuts, giving borrowers more options and better deals. For those waiting on the sidelines, now is the time to stay alert. The window for securing a lower rate may be opening sooner than expected.
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Babek Ismayil
CEO at homebuying platform OneDome
Swap rates are once again on the way down, which may translate into cheaper mortgages for borrowers should this trend continue. However, with inflation edging up again, markets remain unpredictable, and we have already seen significant volatility in mortgage pricing this year. That said, a sustained decline in swap rates could encourage lenders to adjust their pricing more competitively, offering relief to both first-time buyers and those looking to remortgage. It’s a positive step in the right direction, and historically, lower mortgage rates have been a key driver of increased activity in the property market, potentially providing a much-needed boost to both buyer confidence and affordability.
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Steve Humphrey
Adviser & Founder at The Mortgage Pod
Any rates heading south is great news and, right now, the "3" has never looked so good. In an increasingly competitive marketplace among mortgage lenders, I’d expect a swift response, and hope to see fixed-rate reductions imminently. It’s in market conditions like this that mortgage brokers with robust systems and processes to monitor rates and client's options will really add value to borrowers. As a famous Mr. Martin once said, mortgage brokers are worth their weight in gold right now—especially when swap rates are falling.
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Jack Tutton
Director at SJ Mortgages
Some much needed positivity in the market after the recent inflation news, these reductions are much needed. However, SWAP rates are volatile so lenders will want to see this trend continue in the short term before passing these reductions on. Should this level of reductions continue, it will be great news for anyone whose mortgage is coming up for review this year.
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Ben Perks
Managing Director at Orchard Financial Advisers
Seeing the 2-year swap rate dip below 4% is an indicator that better times may be on the way. The road to recovery resembles every road in Britain: bumpy and with plenty of potholes to catch us out. We saw swaps rise last week, but this week we breathe a sigh of relief as they seem back on track as we enter Spring. Stability is more important than ever to improve market conditions. A smoother rate of reduction in swaps at a steady pace will give lenders the ability to plan and compete for business efficiently, which is positive news for borrowers.
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Dariusz Karpowicz
Director at Albion Financial Advice
Sonia swap rates are heading south again, bringing a glimmer of hope to the mortgage market. This unexpected dip comes despite recent inflation concerns and the general economic gloom, suggesting that fixed rate mortgages could soon follow suit. Lenders will likely be watching this trend with caution before making any hasty decisions, as 2025 has already proven to be a rollercoaster for swap rates. If this downward trajectory continues beyond the usual weekly yo-yoing, we may see more cuts in the coming weeks. The timing couldn't be better, with household bills set to increase and precious little positive news elsewhere in the economy.
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Elliott Culley
Director at Switch Mortgage Finance
So far 2025 has been extremely unpredictable with swap rates yo-yoing on a weekly basis. With the recent rise in inflation and bills increasing in the near future, it is surprising to see SWAP rates falling. If the trend continues expect to see mortgage lenders try to take advantage of this and offer some lower rates.