Blame Swap rates

May 5, 2022

By Tom Collier

If you’ve been keeping an eye on mortgage rates lately you will have seen them increase a large amount. Here is a brief bit of the back story into why this is happening.

The reason rates are going up at such an unprecedented rate is a complicated one. Rates have been affected by the global economy in the wake of the Russian invasion of Ukraine and the pandemic, amongst other things.

A large part of the reason that the larger lenders in the UK have increased their rates so frequently is due to the impact of Swap rates and the London Interbank Offer Rate. (LIBOR) The former is not a set rate but determined by the appetite for ‘risk vs predictability’ amongst the world’s largest banks and companies. The latter is agreed by the largest banks every morning. Both are showing an upward trend.


Swap rates on debts between large organisations are generally lower at times when the appetite for variable rates of interest is similar to that of the appetite for fixed rates of interest.

There is a greater demand for fixed rates now which inevitably pushes them up. This demand has spiked as many of these organisations pay the LIBOR rate on their debts which itself has increased quickly.  We’re talking about huge transactions between large organisations and banks here, not just mortgage rates. These costs trickle down and eventually impact mortgage rates, that’s what’s happening now.


LIBOR is an extremely dynamic rate of interest, it can go up or down every day. This is the rate that the majority of Banks pay one another on borrowing between them. The average here has risen sharply since February going from around 0.4% to 1.2% in that time.

All of this has led to the banks increasing their mortgage rates. This has been further fuelled simply by the demand for fixed rates by the consumer. No single bank wants to be exposed as the cheapest for too long.

Sadly no one knows what’s going to happen next. Sorry folks, no happy ending on this one.

Steven Morris – Advising Director



Steve loves a complex mortgage. Most recently he has used his technical geekery to work his way up through Which? Mortgage Advisers, progressing to Senior Adviser and then Onboarding Manager. There, he was responsible for hiring, training and managing new advisers.

He also ran the monthly new starter inductions and wrote and maintained the telephony advice standards of the company. Outside of work Steve can be found coaching and being run ragged by his local under 10’s rugby team, Bristol Harlequins RFC.

Meet the rest of the Advantage Team

Why a Local Mortgage Advisor Makes All the Difference for Your Bristol Home Journey

Congratulations! You've decided to take the exciting (and sometimes daunting) step of buying a home in Bristol or the surrounding area. Whether you're a first-time buyer eager to step onto the property ladder or a seasoned mover looking for your next dream home,...

Are mortgage rates in the UK going up or coming down 2024

I thought mortgage rates were coming down in 2024, what is happening?  Let’s get a misconception out of the way early about how mortgage rates have been changing… Mortgage rates available during January 2024 were cheaper than anything else we have seen since. For...

Homeownership Made (Slightly) Easier: The New £5k Deposit Mortgage

Surprise news for first-time buyers!  Accord Mortgages and Yorkshire Building Society have launched a brand new mortgage product that lets you step onto the property ladder with a deposit of just £5,000. That's right, you can finally ditch the housemate and snag your...

UK Mortgage Rollercoaster: Rates Tumble, Yet House Prices Remain a Challenge (April 6, 2024)

MARKET WATCH! UK Mortgage Rollercoaster: Rates Tumble, Yet House Prices Remain a Challenge (April 6, 2024) This week in UK mortgages has been a tale of two trends: good news for potential borrowers with falling rates, and lingering concerns for some facing a tough...

UK Mortgage Rates: A Quick Look at the Last Week (as of March 24th, 2024)

MARKET WATCH!  UK Mortgage Rates: A Quick Look at the Last Week (as of March 24th, 2024) This week in the UK mortgage market (as of March 24, 2024), we've seen a relative pause after several weeks of steady increases in interest rates. The Bank of England (BoE)...

Help! I’m a Birmingham Midshires Residential Mortgage Customer

Birmingham Midshires Exited Direct Mortgage Market in 2011: What Existing Customers Need to Know  Important information for Birmingham Midshires mortgage holders: As of October 1, 2011, Birmingham Midshires made a significant change – they stopped offering...

February 26th 2024 mortgage news

Halifax buck the trend In a surprising move, Halifax, the UK's biggest mortgage lender, has cut its mortgage rates, going against the recent trend of lenders raising theirs. This move is seen as an attempt by Halifax to gain market share in the competitive mortgage...

February 14th 2024 mortgage news

What's in the news? February 2024   The cost of moving and stamp duty is putting millions of homeowners off of potentially downsizing. Older homeowners are unable to move to smaller properties because of the financial burden that comes with a house move, and this...

Navigating the Financial Maze of Downsizing in Retirement: What are Bridging Loans?

Retirement often marks a period of transition, a time to embrace new experiences and simplify life. Many retirees consider downsizing their homes, seeking a smaller, more manageable living space that aligns with their changing needs and lifestyle. However, the...

Mortgage rates are falling in the UK as lenders battle for business in 2024

After a gruelling two years of rising interest rates, the UK mortgage market is now seeing a price war as lenders compete for business. This is good news for borrowers, who are now finally seeing rates fall. Halifax, one of the country's biggest mortgage lenders, has...

Celebrating more 5-star reviews than any other independent broker in Bristol!

Contact us today to find out why we've received over 400 hundred 5-star Google reviews

You have Successfully Subscribed!