Mortgage rates have begun to show early signs of easing as the Middle East conflict de-escalates.<\/p>\n
Rates on mortgage deals skyrocketed with the onset of the conflict, rising by more than 100 basis points on average since the beginning of March.\u00a0\u00a0However, the market has now shown signs of cooling as the prospect of a peace deal looks finally in sight.\u00a0\u00a0Hundreds of mortgage deals have come back onto the market, while average two-year fixed rates have fallen three basis points (5.87% down from 5.90% a week earlier) according to financial data provider Moneyfactscompare.\u00a0\u00a0Two major lenders, Santander and TSB, have\u00a0both cut fixed and tracker mortgage rates, suggesting that the market might now be pricing in further reductions.<\/p>\n
While still far off pre-war deals, the reduced tension in the geopolitical landscape has fed through quickly to the market.\u00a0\u00a0Moneyfacts says that alongside falling swap rates \u2013 fixed interest rates which dictate mortgage lender pricing \u2013 it has seen a slew of new deals on the market offering higher loan-to-value (LTV) ratios, aiding borrowers looking for larger loans.<\/p>\n
While the modest falls are potential good news, rates are still highly susceptible to ongoing uncertainty and will not fall as quickly as they rose \u2013 despite reports of ceasefire and the\u00a0reopening of the Strait of Hormuz.<\/p>\n
How swap rates work<\/strong><\/p>\n Although much is made of the Bank of England\u2019s base rate, the truth is that mortgage lenders don\u2019t rely solely on this to price their products.\u00a0 Instead, lenders use the swap rate market to determine the price of the mortgages they provide.\u00a0\u00a0Swap rates help lenders to manage their interest rate risk when lending to borrowers.\u00a0 The swap rates rise and fall depending on wider economic conditions and are determined in a market that takes into account wider financial instruments such as bonds.<\/p>\n The widespread uncertainty caused by the Middle East crisis has not just caused rates to rise, it has also led many lenders to withdraw deals from the market as they are unable to price confidently thanks to the volatile nature of the situation.\u00a0\u00a0This presents problems for borrowers, whether they\u2019re looking to get on the ladder or remortgage an existing deal, who then find the market is constantly changing.<\/p>\n For anyone considering taking on a mortgage or remortgaging it is essential to ensure they are taking the best approach to find an affordable and realistic deal for their circumstances.\u00a0 A professional mortgage broker can help find the best deals on the market for your situation and advise on how to go about the process in the timeliest manner possible, despite any ongoing uncertainty.\u00a0 Speak to us for mortgage advice, or to discuss this or any wider financial considerations you may have.<\/p>\n","protected":false},"excerpt":{"rendered":" Mortgage rates have begun to show early signs of easing as the Middle East conflict de-escalates. Rates on mortgage deals skyrocketed with the onset of the conflict, rising by more than 100 basis points on average since the beginning of March.\u00a0\u00a0However, the market has now shown signs of cooling as the prospect of a peace deal looks finally in sight.\u00a0\u00a0Hundreds of mortgage deals have come back onto the market,…<\/p>\n