Mortgage Rates Rise Again
It’s been a turbulent week in the financial markets and this has pushed mortgage rates higher. Rising inflation concerns and global uncertainty have caused the money markets to increase “swap rates”, which lenders use to price fixed mortgages.
As their funding costs rise, lenders quickly adjust pricing. Over the past few days several major lenders including Halifax, NatWest, Barclays, HSBC, Nationwide and Santander have increased mortgage rates or withdrawn products while they reprice deals. This can happen even when the Bank of England base rate has not changed because fixed mortgage rates are driven primarily by movements in the financial markets.
Why Swap Rates Have Continued To Rise
Over the past week UK swap rates have risen sharply, which is why many lenders have increased mortgage rates. Swap rates are the financial market rates banks use to price fixed mortgages. The increase has been driven by global uncertainty and rising energy prices linked to the conflict in the Middle East, which raises concerns that inflation could remain higher for longer. Over the past week 2, 5 and 10-year swap rates have increased by roughly 9% on average. If markets continue reacting to these risks, swap rates and mortgage pricing may continue to adjust in the coming weeks.
14th March Swaps
6th March Swaps
Review Your Mortgage Now?
The short-term outlook for mortgage rates remains reasonably favourable if you are planning to review your mortgage soon. However, if financial markets remain volatile and inflation continues to rise, lenders may start increasing their Standard Variable Rates, particularly if the Bank of England raises the Base Rate to help control inflation.
If your mortgage deal ends within the next 3–6 months, it may be sensible to review your options now. Securing a rate early can provide protection if lenders increase pricing further. At IMDNE, we continually monitor lender rates right up until completion. If a lower rate becomes available, we automatically secure the improved deal, ensuring you never miss out on better terms.
