Looking to get your head around the housing market? We speak to Gurmeet Kalra, a Financial Advisor at Aitana Financial Services, on what swap rates mean – and why they’re so important.
What are swap rates, and why should our readers care about them?
Swap rates reflect the financial markets’ interpretation of future interest rates. Several factors influence swap rates, including UK economic data such as inflation, the impact of domestic policy on borrowing costs – remember the Liz Truss mini-budget – and geopolitical events such as global conflicts and energy shocks.
Lenders use swap rates to determine their long-term borrowing costs. In simple terms, this means movements in swap rates can influence the rates offered on fixed-rate mortgages. If swap rates rise, fixed-rate mortgage products are likely to rise in tandem.
Who sets swap rates, and what makes them move up or down?
Swap rates are not set by any single person or institution. They are a function of the cost of borrowing and lending between financial institutions as they seek to hedge their long-term fixed-rate exposure.
Several factors can cause swap rates to move, including geopolitical risks, economic data such as inflation, and changes in domestic policy, to name a few.
If someone’s fixed-rate mortgage deal is ending in the next few months, what should they be doing right now?
Firstly, every homeowner’s situation is unique. Statistics show that around 1.8 million fixed-rate deals are expiring in 2026, at a time when mortgage rates remain significantly higher than they were several years ago. This means many borrowers will now be looking to remortgage at considerably higher rates than before.
The right advice is to engage with your mortgage broker, who can assess any changes in your personal circumstances since your last mortgage application, review your current affordability and present you with mortgage options that suit your requirements.
Ideally, homeowners should speak to a broker around six months before their current deal expires.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Aitana Financial Services is a trading name of Kevin Paul Manktelow which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority. Approved by The Openwork Partnership on 16th September 2026
