While the average swap rate climbed almost every month since interest rates started to increase, growth rates have started to reduce in recent days, suggesting that a reduction in mortgage costs could soon be on the cards, according to Octane Capital.
Swap rates increased every month since December 2021 – with the exception of November 2022 and January 2023.
So far in July, the average swap rate price increased by 9% versus June, up from 5.716 to 6.213.
Throughout 2022, swap rates increased at an average monthly rate of 18% per month; in July so far, this average monthly rate of growth has slowed to 9%.
In January and July of last year, the average monthly rate of growth was 22%, highlighting that while swap rates have continued to climb, they are doing so less steeply.
On 11th July, 1-year swap rates sat at 6.32, but then reduced to 6.12 as of 18th July.
Similarly, 5-year swap rates reduced from 5.62 on 11th July to 5.24 on 18th July.
Jonathan Samuels, CEO of Octane Capital, said: “Swap rates, while erratic from one day to the next, do start to portray where the market is heading over time and help us pre-empt whether the cost of borrowing is set to rise or fall.
“As the data shows, they have been increasing pretty much since interest rates started to climb when viewing the market on a month-to-month basis, which echoes the wider mortgage market landscape when it comes to the higher cost of borrowing facing buyers and remortgagers at present.
“However, there are initial signs that this tide may be starting to turn, and this suggests that the market is expecting lower rates than previously thought.
“Only time will tell if this will be the case, however, this is certainly a glimmer of positivity within an otherwise gloomy economic picture.”
