Swap rates on one-year lending have gone up by 0.11 per cent in the last eight days of February, while rates on three-year lending have shot up by 0.15 per cent.
This has led Jonathan Cornell, technical director at Hamptons International Mortgages, to warn that lenders will soon look to pull their existing product rates in response to this surge in.
“The recent surge in swap rates means that the lenders will no doubt put their fixed rates up and while this is not an instant process, you can safely say that rates will increase. Obviously, some lenders will respond quicker than others but unless swap rates plummet, lenders will start pulling their products in the next two or three weeks.”
With the current popularity of fixed rate mortgages, highlighted by the Council of Mortgage Lenders figures, which show 75 per cent of all mortgages are currently fixed, Cornell insists brokers must move now to ensure clients get the best rates.
“You get different lenders doing things for different reasons but needless to say, higher swap rates will mean higher product rates. My message is if you want a fixed rate, do it now.”
Mark Sismey-Durrant, chief executive of Heritable Bank, believes there may be some movement but not for a couple of weeks at least. He explained: “Swap rates are currently responding to poor data coming from the high-street. There are issues with the fact that people are putting their consumer debt into mortgages, which is not good. However, lenders don’t want to stop-start with rates so they will probably stay where they are for now. If things stay as they are for the next three to four weeks though, then we may see some movement.”
