Call for your free quote 0800 955 0058

Mortgage rates are unchanged despite lower money market rates

Warnings from the Bank of England has seen fixed rate mortgages remaining stable despite recent falls on the money markets.

Research from Moneyfacts shows the average two-year fixed rate has remained unchanged since the beginning of June at 2.49% and the tracker rate at 2.01%.

The average five-year fixed rate has remained unchanged at 2.85% since the beginning of May this year even though the money market SWAP rates have reduced which usually indicate an imminent change.

Darren Cook Finance Expert at Moneyfacts said, it is clear that the Bank of England warning in May that it is watching mortgage rates ‘like a hawk’ is continuing to influence lenders.

Many first time buyers, home movers, remortgage buyers and buy-to-let investors select a fixed rate mortgage as your monthly repayments remain the same during your introductory offer.

How SWAPs impact mortgage rates

The pricing of fixed mortgage rates depends on several factors although primarily whether banks can access cheap money to lend out.

The following table from Moneyfacts shows the change in 2-year fixed rate mortgages compared to the 5-year SWAP rates until July 2019.
Month 2-year SWAP rate
Jul-19 2.49% 0.80%
Jun-19 2.49% 0.92%
May-19 2.47% 1.19%
Apr-19 2.48% 1.07%
Jan-19 2.52% 1.24%
Banks usually source money from savers or by borrowing from other banks on the money markets, buying money at a certain rate called the SWAP rate for a certain time period.

These SWAP rates react to expectations of future interest rates and inflation, which affect the price of mortgages and this table shows the 5 and 10 year fixed rate mortgages compared to the 5-year SWAP rates.
Month 5-year 10-year SWAP rate
Jul-19 2.85% 3.01% 0.80%
Jun-19 2.85% 3.00% 0.92%
May-19 2.85% 3.00% 1.19%
Apr-19 2.88% 3.03% 1.07%
Jan-19 2.94% 3.05% 1.24%
SWAP rates can drop sharply such as the first quarter 2016 amid global economic turbulence and the first half of this year due to the US-China trade talks and Brexit.

Even though SWAP rates have reduced considerably with the 5-year rate reducing 0.48% from 1.24% in January 2019 to 0.80% in July, the 5-year fixed mortgage rate has reduced only 0.09%.

If interest rates remain unchanged home movers may feel they cannot afford to trade up to a more expensive property due to the higher monthly repayments on a new mortgage.

For remortgage buyers at the end of your mortgage deal, switching to another preferential rate would not make your monthly repayment lower but would be cheaper than the lenders expensive variable rate.

Regulator monitoring mortgage rates

The Bank of England has warned lenders it is watching the mortgage rates as there is a concern even lower rates would result in first time buyers and home movers taking on excessive levels of debt.

The 2-year SWAP rate has reduced by 0.31% since May, the 5-year SWAP rate is lower by 0.39% and the 10-year down by 0.40% over the same period.

For first time buyers the average 2-year fixed rate mortgage interest rate has remained similar decreasing only 0.03% from 2.52% in January 2019 to 2.49% in July, limiting the amount they could borrow.

In contrast, for older equity release buyers there are lower fixed rates of 3.5% upwards to secure for a lifetime mortgage without any evidence of earnings and use this to maintain your lifestyle, consolidate debt or holidays of a lifetime.

Darren Cook said, under previous normal market conditions, when SWAP rates took a sharp deviation, we could comfortably predict that fixed mortgage rates would follow suit after a three to four-week lag.

The difference between the five-year fixed rate and ten-year fixed rate is only 0.16% and homeowners may like to lock-in to an extra five years knowing their monthly repayments are fixed.

What are your next steps?

Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or a buy-to-let investor.

Learn more by using the equity release mortgage calculator, mortgage cost calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.

For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to gift to a family member or friend or pay university fees for grandchildren.

Mortgage Best Buys

These are examples of mortgage products we can approach with many more offering interest rates and flexibility to meet your needs.

1.17% Fixed Rate
60% Loan to Value
£1,025 App Fee
Until 31/09/2022
Reverts to 3.59%
1.16% Fixed Rate
60% Loan to Value
£1,525 App Fee
Until 01/11/2022
Reverts to 4.09%
1.19% Fixed Rate
60% Loan to Value
£999 App Fee
2-Years Time
Reverts to 3.59%
1.18% Fixed Rate
60% Loan to Value
£1,034 App Fee
Until 31/10/2022
Reverts to 3.59%

The latest mortgage news

25 Jun 2021

Seaside towns in Britain with house prices up 10pc due to strong demand

Demand for coastal living has seen house prices in Britain’s seaside towns rise 10% over the year as homeowners change their lifestyle.

24 Jun 2021

House prices at record levels with lack of property choice for buyers

Supply of properties on the market and available to buyers is an all-time low at the same time house prices are at record levels.

11 Jun 2021

Prices for house sales are rising four times faster than flats

Strong demand for houses has driven price growth up 5.2% in the last year which is over four times more than the 1.1% growth for flats.

28 May 2021

Fixed rate mortgage deals fall to under 1pc as lenders compete for borrowers

Fixed rate mortgages are cut to 0.99% for borrowers with large deposits looking to remortgage as competition increases from lenders.

Call for your free quote 0800 955 0058


    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


    Equity Release - Equity Released from your home will be secured against it. Mortgages – Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured against it. Think carefully before securing other debts against your home. The information contained in this website is subject to the UK regulatory regime and is therefore intended for consumers based in the UK.


    9th Floor, 30 Crown Place
    London, EC2A 4EB

    0800 955 0058


    London City Mortgages Limited is a registered company in England & Wales under company number 09278987. London City Mortgages Limited is an Appointed Representative (FCA no. 655965) of Blackstone Moregate Limited (FCA no. 459051) which is authorised and regulated by the Financial Conduct Authority. LCM and LCM Equity Release are trading names of London City Mortgages Limited.

    2021 © London City Mortgages.
    Website designed & developed by Spyre Media