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SWAP Rates Fall, Will Mortgage Rates Follow?


I like to keep a close watch on the cost of funds in terms of SWAP rates, mainly because I am a bit sad, but also because they give us an insight into where the market believes interest rates will be in the future. Amongst other things, lenders base their fixed rates on these markers.

What has been noticeable in the past couple of weeks is how these have fallen once more, with 5-year money now back under 1% and 2-year SWAP rates at their lowest level since September 2017.

I thought you may like a nice chart that shows this:

This is in no small amount due to the potential of Boris as our new PM and his rhetoric around leaving the EU with or without a deal on 31st October. Amongst other things he has also said that he is looking at the prospect of potentially passing the Stamp Duty liability from the buyer to the seller. Watch this space…

As a result, we have seen a number of lenders dropping rates again, albeit slightly, as they hope to entice borrowers over the summer period and set up a good end to the year. If you were waiting for a good time to buy or remortgage, you could do a lot worse than right now!

We also saw some figures from the Royal Institute of Chartered Surveyors, (RICS) who pointed to the first rise in home sales since early 2017. They expect the number of agreed sales to remain stable over the next three months and to rise over the next year.

I was also interested to see research from Quick Move Now who say that just over one in four property sales (25.49%) fell through before completion in the second quarter of the year; a 2.16% rise from the 23.33% of sales that fell through in the first quarter of this year.

There are various reasons for this, but we always say that the best way to guard against this is to have the trinity of a good estate agent, a good solicitor and a good broker on the case.

Rate wise, for standard residential mortgages, borrowers can obtain 2-year fixes at 1.35%, (3.84% APRC) and 5-year fixes from 1.75%, (3.62% APRC) whilst variable tracker rates are around from 1.29%, (3.82% APRC).

Those looking at Buy-To-Let can still obtain products from just 1.41%, (4.86% APRC) for 2-year fixed or 5-year fixes are available from 1.89% (3.73% APRC).


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