Current market with Swap rates rises
The most recent figures I can find are from about a week ago: The swap rates at 2Y 4.57%, 5Y 4.73%, Swap rates are the wholesale cost lenders pay to lock in a fixed interest rate for a set period, they are the single biggest driver of fixing the mortgage pricing.
That’s a sharp climb. Chatham Financial had the two-year swap at 4.26% on 3 September, up from 4.06% a month earlier in August and the five-year up from 4.16% to 4.36% over the same period. In late February they were around 3.33% (2Y) and 3.51% (5Y) this has had a huge impact on clients that due a Remortgage especially when they are from a fixed rate 5 years ago estimating around the 1.75% this is a huge payment shock and has a huge impact on the stressing
Here’s the context for your clients:
- Base rate: The Bank of England held at 3.75% on 17 September, with six members voting to hold and three voting to raise to 4%.
- Market pricing: Markets are pricing in around four rate rises over the next 12 months.
- Lender repricing: All of the big six lenders have raised fixed rates this month, and each has now repriced twice since early September.
- Averages: The average five-year fix has gone from 4.94% in early March to 5.91%, according to Moneyfacts.
- Next dates: The Autumn Budget is on 28 October, and the next MPC meeting is on 5 November.
Anyone sitting on an offer or a product transfer option may want to secure it sooner rather than later, since more lenders are likely to reprice.
What moves swap rates – this is reflected with inflation this then has a knock on affect with huge interest rates along with difficulty when buy to lets hits harder on the ICRs of 125-145% using this pay rate or a pay rate resulting to difficulty in Remortgaging.
