If you have a mortgage, this is worth 30 seconds of your time.
This was a Linkedin post from Monday. The principles are the same although the swaps have edged up slightly since then. This is more to illustrate how the swap rates are the main influence for lender pricing.
Swap rates have fallen quite a bit over the past month. Two year swaps are down from 4.21% to 4.16%. Five year swaps are level now but they were lower earlier on in the week. You can see today's numbers in the image below.
Never heard of swap rates? Here is the quick version.
Think of the Bank of England base rate as today's weather. Swap rates are the forecast. Your lender is not pricing your fixed rate off what is happening today, they are pricing it off where the market expects rates to go.
When that forecast improves, fixed rates can start coming down before the Bank of England has even made a move.
The mainstream media will not tell you this. You will get house price headlines and base rate speculation. But quietly, behind the scenes, the swap market has been moving in the right direction and lenders are already starting to reflect that in their pricing.
If your fixed deal is ending in the next six months or if you're a first time buyer or home mover looking to take a new mortgage, now is the good time to have a conversation.
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