Economic Update
The Bank of England voted yesterday by 7 votes to 2 to keep the Base Rate unchanged at 3.75%, marking the fourth consecutive meeting without a change. Policymakers remain cautious, balancing inflation, which remains above the 2% target at 2.8%, against signs of a slowing economy. Although inflation is expected to peak at just over 3.25% later this year, this is lower than previously forecast. Financial markets increasingly expect the Base Rate to remain between 3.75% and 4.00% for some time, with any future reductions likely to be gradual, while two Monetary Policy Committee members voted for an increase to 4.00%, demonstrating that inflation concerns have not disappeared entirely.
The housing market remains resilient despite house prices falling for a third consecutive month in May, with annual growth still positive at around 0.5% and mortgage approvals broadly in line with 2025 levels.
Swap Rates Fall – Helping Fixed Mortgage Rates Ease
Mortgage lenders have continued to trim fixed rates in recent weeks. This is largely due to a fall in swap rates, which are effectively the wholesale borrowing costs lenders use to fund fixed-rate mortgages. Over the last month, swap rates have fallen noticeably, with two-year swaps reducing from 4.64% to 4.35%, five-year swaps from 4.68% to 4.39%, and ten-year swaps from 4.93% to 4.64%.
Financial markets are more confident that interest rates will remain stable or gradually reduce in the future as inflation eases and economic growth slows. As lenders’ funding costs fall, they can reduce mortgage rates, though they are doing so cautiously and at a measured pace.
19th June Swaps
15th May Swaps
What Does This Mean For Borrowers
For homeowners and buyers, the message remains broadly positive. Fixed mortgage rates are still competitive, and although the Base Rate remains elevated at 3.75%, expectations are for stability rather than sharp increases. Borrowers approaching the end of their current deal should continue reviewing their options early to secure the most suitable rates available.
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.
You can also use our online mortgage sourcing tool to check the latest deals available. The system provides real-time mortgage results, allowing you to compare products based on your own circumstances before deciding whether to take advice or secure a rate. This can be particularly useful if your current mortgage deal is ending soon, or if you want to understand how recent market movements may affect your borrowing options.
