By James Evans, Director, TouchPoint Mortgages.
Many homeowners have noticed mortgage rates rising in the UK over the past few weeks. Much of this movement has been linked to growing global uncertainty and events in the Middle East affecting financial markets.
While any increase in rates is never ideal for borrowers, the key message right now is not to panic. The changes we have seen so far are relatively small, and it’s important to understand what’s driving them and what homeowners should be doing next.
Mortgage rates in the UK aren’t determined solely by the Bank of England base rate. In fact, fixed-rate mortgages are largely influenced by something called SONIA swap rates, which reflect expectations about future interest rates and inflation.
When financial markets become uncertain, these swap rates can move quickly.
Recent tensions in the Middle East have pushed oil prices higher, which raises concerns about inflation. If inflation rises again, central banks may delay interest rate cuts or even consider tightening policy.
As a result, lenders have seen their funding costs increase slightly, which can lead to mortgage rates moving up as well.
Financial markets have already reacted quickly, with hundreds of mortgage products being withdrawn or repriced by lenders as they reassess their pricing.
Looking at the most recent SONIA swap rate data:
2-year swaps: increased from 3.421% to 3.662%
5-year swaps: increased from 3.647% to 3.787%
10-year swaps: increased slightly from 4.014% to 4.086%
While these movements may influence mortgage pricing, they are relatively modest increases and far from the dramatic spikes we saw during the 2022 mini-budget crisis.
Markets are simply reacting to uncertainty. If global tensions settle or inflation pressures ease, swap rates — and mortgage pricing — could stabilise again.
One thing we’re seeing more and more at the moment is homeowners waiting until the last couple of months of their fixed rate before speaking to a broker.
Unfortunately, this can cost money.
Mortgage rates are constantly changing, and if someone waits until two or three months before their deal ends, they may miss the opportunity to secure a lower rate that was available earlier.
At TouchPoint Mortgages, we regularly speak with clients who could have saved money had they secured a new rate sooner.
Many homeowners don’t realise that you can secure a new mortgage rate up to six months before your current deal expires.
This gives you two huge advantages:
You lock in today’s rate before any further increases
If rates fall later, we can often switch you to a better deal before completion
In short, you protect yourself against rising rates while still keeping flexibility.
If your mortgage deal is due to end between now and the end of September, now is the time to start reviewing your options.
Leaving it too late could mean:
Fewer mortgage products available
Higher rates than those available earlier
Less time to plan your next deal properly
We’re here to help make the process straightforward and ensure you secure the most suitable rate available.
If your mortgage is due for renewal within the next six months, please don’t wait until the last minute.
Get in touch with us at TouchPoint Mortgages, and we’ll review your options and help you secure the right deal.
Even if you just want some advice or reassurance about what’s happening in the market, we’re always happy to help.
Send your message and we will be in touch, alternatively you can book an appointment to chat to one of our team.
