Mortgage rates are rising, despite the Bank of England's base rate remaining unchanged. This phenomenon can be attributed to a complex interplay of global economic factors, particularly the recent US-Iran conflict and its impact on interest rate expectations. The article delves into the intricacies of mortgage pricing, swap rates, and the role of lenders in managing risk. It highlights how swap rates, which reflect future interest rate expectations, have surged due to increased economic uncertainty. This, in turn, affects mortgage rates, as lenders adjust their pricing to account for potential interest rate hikes. The piece also explores the psychological and market dynamics at play, including the fear of being exposed to market volatility and the potential impact on house prices. The author concludes by suggesting that the trajectory of mortgage rates and swap rates will depend on the duration and outcome of the conflict, with potential implications for homeowners and lenders alike.
