It has been interesting to watch the movement of SWAP rates over recent weeks, as they continue their inexorable rise.

Buoyed by the fact that various Consumer Confidence Indices continue to show improvement, for example the Lloyds Business Barometer confidence rating has risen to a 9-month high, together with Inflation easing, employment at record highs and GDP in 2017 seemingly coming in at better than expected around 1.8%, means that rate hikes do look a lot more likely this year.

In fact, economists have gone so far as to suggest that there may be two rate rises this year, potentially in May and November according to The Times today.

Much may depend on inflation, especially if it continues to fall back towards the 2% target and of course we still have the potential for any number of Brexit issues. However, Brexit does seem to have calmed down now we are over the first part of talks and more of a threat is the Political Environment itself, with Prime Minister May tenuously clinging to power and the Conservatives turning on each other, left, right and centre.

Corbyn may be licking his lips and waiting in the wings, but a sudden change of colour in Downing Street would create its own issues and there remains a real sense of unease over whether our political elite really know what they want, let alone what the public wants.

When all is said and done I still believe one rise would be enough this year, but it will come earlier than expected, possibly April/May, but we will all be watching the latest Inflation Report on Thursday and the language used by Mark Carney carefully.

Whatever happens, the rise in SWAP rates, (they are now at their highest level for a year as far as I can see), means that we may well see lenders start to tweak rates upward before any such move despite competition in the mortgage market being rife.

Add to this the end of the Term Funding Scheme on 28th February this year, which has enabled lenders to access cheap funds to lend out, this could see some lenders having to increase their offerings by around 0.25% according to some commentators.

In other words, the well trodden mantra is back, for those looking at taking out a mortgage and certainly for those coming to the end of their current rate, it makes sense to review their options sooner rather than later.

 

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