Capital & Interests: Betting The House: How Swap Curves Affect Your Mortgage

In this article, Harry explores the present landscape of "The Swap Curve."

Harry says, "Has anyone else noticed that house prices have remained stable over this recent fiscal tightening cycle, without the sharp spike in repossessions and price crashes that defined the early 90s?

Harry continues “Here’s where the swap curve comes into play. Lenders keep an eye on the price of money in the financial markets, and use those figures to determine the rates they offer. This price, called the spread, reflects what traders believe the base rate will average over the duration of your mortgage product. It’s essentially a bet: we reckon the base rate for the next two years will be this, so the rate for your 2-year fixed mortgage should be that..”

To access the full article, click the link here: "Betting The House: How Swap Curves Affect Your Mortgage."

While navigating today’s mortgage market may feel daunting, a little understanding around these underlying dynamics can help you make more informed decisions which is why a good mortgage advisor is a sensible ally to have in your corner.