Brokers forecast end of falling mortgage rates
Following a recent surge in swap rates, brokers are warning that the ongoing trend of falling mortgage rates could be nearing its end.
Swap rates are used by lenders to hedge possible interest rate increases and are closely linked to mortgage pricing levels. The rates have begun to creep up since May however in recent days have seen more of a surge.
Five year swap rates were at 0.94% at the beginning of May – however by 23rd June, the rates had reached 1.85%.
Brokers are now warning that the sharp rise in swap rates could have an effect on the current mortgage market – particularly five-year fixed rates.
Ray Boulger of John Charcol, an independent mortgage advice company, said:
“It seems to me, from a borrower’s perspective, the rational for waiting a bit longer to see if rates come down any further has completely disappeared and the potential for any further cuts is negligible, while the potential for rates to go up is substantial.”
Some lenders have already started to push up their rates – particularly on their five-year fixed deals, so it may only be a matter of time before other lenders follow suit.
One such lender is Newcastle Building Society who have increased their five year fixed rate (80% LTV) to 3.99%, which had previously been at 3.59%.