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"Things are suddenly looking brighter for borrowers" as swaps soften and 5-year gilts dip back below 4%

ended 16. October 2024

The 5-year gilt was back below 4% at this morning’s open, following swap rates already softening after yesterday’s slowing wage growth data. Newspage asked mortgage experts if they expect the rate hikes of the past fortnight or so to be reversed in the days ahead — and for lenders to start cutting all over again? Their views are below.

10 responses from the Newspage community

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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
After two weeks of turbulence in the mortgage market, with lenders large and small raising their rates, this positive inflation data could mean it was a blip rather than the beginning of a longer term upwards trend. The rate rises may now tail off as we await the outcome of the autumn Budget.
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Ben Perks
Managing Director at Orchard Financial Advisers
We've had a rush of rate-positive figures this morning. With inflation back below 2%, and with room to spare, another Base Rate cut before the year is out looks baked in. However, lenders look set to remain cautious over the next few weeks and wait to see what the Chancellor does. It’s really all in Rachel Reeves hands at this point. She has to claw back money to fill the £22bn black hole, but if she doesn’t do this sensitively, our economy could deteriorate into a dog's dinner before the month is out.
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Justin Moy
Managing Director at EHF Mortgages
There will likely be a small correction back in the right direction over the coming days. Lenders don't like the 'doom and gloom' of rate increase news and, assuming Swap rates maintain their downward trend today, things are suddenly looking brighter for borrowers. There is still nervousness about the Budget impact though, so for those refinancing please don't delay with your remortgage. We have seen in the past few weeks how easy it is for the cost of borrowing to worsen without much notice.
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Elliott Culley
Director at Switch Mortgage Finance
Unless swap rates rapidly return to previous lows, it's likely lenders will continue to offer similar rates to what they are currently. The autumn Budget is imminent and will be a milestone with the potential to impact the direction of rates over the next couple of months. Lenders are likely to make no big changes in rates until the aftermath of the Budget is clear.
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Graham Cox
Director at Bridging Hub
If swaps continue to fall over the coming days, which seems likely, then any base rate cut on November 7th will have already been priced in to mortgage rates. Expect lenders to reverse gear and announce lower rates in the second half of October.
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Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
Traders rush to reprice gilt yields as inflation shocker puts further easing firmly on the table, and rate cut fever grips the gilt market. The better-than-expected drop in inflation has led investors to price in a more dovish stance from the BoE, with the potential for two rate cuts now being factored into gilt prices. This shift in sentiment has provided some much-needed relief to the bond market, which had been under pressure in recent weeks. However, markets remain cautious, aware that this respite may be short-lived, with the forthcoming budget casting a long shadow over the market, introducing an element of uncertainty that could lead to increased volatility. The possibility of increased government borrowing to fund investment programmes has kept many bond traders on edge despite the recent yield decline. Moreover, the divergence between UK and global bond yields remains a concern as gilts trade at a premium, reflecting worries about the long-term fiscal outlook.
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Craig Fish
Director at Lodestone Mortgages
Lots of positive news this morning, most of which should mean rates head back in the direction that we want them to. There are still a couple of worries on the horizon with the Budget and trouble in the Middle East, but assuming the markets don't get too spooked, swap rates should resume their steady downward trend and lenders will ramp up the competition again to hit those year-end targets.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Swap rates should now reduce on the back of today's fall In inflation and the certain base rate fall that will now come in November and likely another in December. This should give confidence to lenders to go all out to hit their end of year targets on lending volume.
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Clive Read
Owner at Goldmanread
We've seen gradual reductions in rates over the past few months though lately some lenders have imposed rate increases. We feel that the level of these increases is more related to lenders trying to manage their business processing timescales. Brokers have been moving like flocks of sheep from one lender to another as rates have become more competitive meaning lender timescales have been hit. We expect to see low and perhaps falling rates in the next few months. But its important for bother brokers and borrowers to remain on their toes to take advantage of these rates when available.
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Dennigan Tyson
Mortgage & Protection Adviser at Pia Financial Solutions
It's a minefield at the moment with Natwest playing their card of increasing rates, but many other banks staying put.

The budget will be the underlining moment for many banks as to how they price things in the last quarter of the year. My advice to all borrowers is the same as it always has been. Get things submitted 6 months prior if you have an existing mortgage and monitor throughout the process. If your looking for a home, then locking into something sooner rather than later is a wise move.