In a fix? Now's your chance

A sharp spike in swap rates has prompted a warning that fixed rate pricing has bottomed out and borrowers could miss out if they wait to secure a mortgage.

Between 12 and 14 August, two-year swap rates have jumped 7 basis points to 0.84 per cent, while five and 10-year swaps have rocketed by 17 and 15 basis points to 1.75 per cent and 2.76 per cent, respectively.

Perhaps surprisingly, swap rates remained fairly static in the days after new Bank of England governor Mark Carney last week announced his decision to introduce “forward guidance” on the potential movement of base rate.

He announced the BoE would not increase base rate from a record-low 0.5 per cent until the UK’s unemployment rate fell below 7 per cent, or if inflation spikes.

This all reinforces that fixed rates are on the floor and for most people there is little or nothing to be gained by waiting for lower rates.

For those looking to remortgage, increasing property prices, a trend likely to continue for at least two years, will enable some homeowners to benefit from the cheaper rates available at lower Loan to Value %, especially if they are on a repayment mortgage and/or overpaying.

Depending on the rate they are currently paying, borrowers in this situation may benefit from waiting a short while to enable them to take advantage of the better rates available at lower Loan to Value %.

However, this strategy runs the risk that rates will rise before the lower level is achieved.

If you would like to see what you can achieve currently , feel  free to get in touch.

As always , thanks for your attention.

Mark