SWAP rates have gone up – what does this mean for mortgage rates, and what should landlords do?
In the last week, we’ve seen SWAP rates increase month-on-month, although they are still down from last year.
We have been enjoying seeing SWAPs soften over the last few weeks due to Trump’s tariffs, making the UK a much more attractive place to invest in. However, just last week, they rose by 0.2%.
The latest lender changes
Over the last month, lenders have rushed to drop their pricing in response to lower SWAP rates. This has been great for the market, with more competitive rates incentivising landlords to explore their mortgage options. Moreover, some are still reducing their pricing due to lower costs.
However, the latest rise in SWAPs suggests that lenders will likely need to increase their pricing in response to the 0.2% increase in their cost of funds.
Concerns for landlords
Whilst mortgage rates have been slowly softening, not all landlords feel ready to secure a new rate. From discussions with our clients, many landlords are still waiting for the MPC meeting in June to see if the Base Rate comes down before making any property finance decisions.
However, landlords should be aware that MPC predictions are priced into the money markets, which means SWAP rates reflect what’s expected to happen with the Base Rate. Consequently, if the Base Rate comes down by 0.25% as predicted next month, it won’t significantly impact mortgage rate pricing.
Your next steps
It’s important to remember that you have more options than simply sitting on your lender’s (likely more expensive) Standard Variable Rate (SVR).
With our help, you can secure a rate at today’s competitive pricing, and should a cheaper deal become available, most lenders will allow you to change your rate before completion. This allows you to hedge your bets on what will happen for mortgage rates – if they go up, you’ve secured a competitive deal, but if they come down, you’ll still have the cheaper options to explore.
Talk to our brokers about your options. We can guide you through the process and find you the best rate on the market. Call us on 0345 345 6788 or submit an enquiry here.
