Mortgage brokers say rates are already shifting as swap volatility returns, with lender repricing continuing despite base rate stability
Mortgage brokers say the Bank of England’s decision to hold the base rate at 3.75% is doing little to steady a market already shifting beneath the surface.
While the hold had been widely expected, lenders have continued to adjust pricing in recent weeks as global uncertainty feeds through into swap rates, the key driver behind fixed mortgage pricing.
Craig Head, director at Mortgage Required, said the gap between base rate stability and mortgage rate movement is becoming increasingly clear.
“Following today’s decision from the Bank of England to hold the base rate at 3.75%, you might expect things to feel stable, but in reality, the mortgage market has been anything but,” he said.
“Over the past couple of weeks, we’ve seen rates shift incredibly quickly, largely driven by global uncertainty, particularly tensions in the Middle East, which have pushed up swap rates. So even though the base rate hasn’t moved today, mortgage rates most certainly have!”
Rather than the base rate itself, brokers point to movements in swap rates as the dominant force shaping mortgage pricing.
Katrina Horstead of Versed said the Bank’s decision reflects a more cautious backdrop, with lenders already reacting to wider economic pressures.
“Following today’s announcement, the Bank of England’s decision to hold the base rate will come as little surprise to markets. While inflation had been easing, recent increases driven in part by the conflict in the Middle East and rising energy prices are likely to reinforce a more cautious stance for now,” she said.
“We are also seeing lenders react to movements in swap rates as a consequence, which has led to some repricing in recent weeks and may continue to influence product availability and pricing in the near term.”
This has translated into a more fluid market, with rates and product availability shifting faster than many borrowers expect.
For some, the hold represents the most positive outcome available in the current environment, even if it does not reverse recent increases.
Carolyn Dunion, director at McKendry Dunion, said: “The base rate holding is probably the best we could have hoped for under the current circumstances. It is important to note that the rate, although cuts might seem like good news, is still low.”
“We have seen mortgage lenders increase their rates in the last few weeks, so it is good news that a base rate rise isn't adding to that trajectory. And on a positive note, mortgage rates are still very affordable, for now.”
However, the decision offers little immediate benefit for borrowers, particularly those hoping for near-term rate relief.
With the outlook becoming less predictable, brokers say the focus has shifted from trying to time the market to building in flexibility. Head said borrowers should act early where possible.
“This is exactly why it’s so important to secure a rate early. Most lenders will let you lock in rate up to 6 months before your rate expires for re-mortgages, giving you protection against further increases, but still allowing you to review and switch to a better deal if rates improve before completion. In a market like this, it’s not about timing it perfectly - it’s about protecting yourself and keeping options open.”
Kevin Gibson, of Ascot Bridging Finance, said the outlook is becoming less certain. “For borrowers and brokers, this likely delays any meaningful easing in mortgage pricing, with clients prioritising speed and certainty in an increasingly unpredictable market.”
The Bank’s decision leaves the broader direction of travel less clear, with inflation pressures and geopolitical risk continuing to shape expectations.
Mortgage pricing is increasingly being driven by external forces, with base rate stability offering little certainty for borrowers or the wider market.
