If that lower-supply effect holds rather than reverses, it should feed through to the swap curve over the coming weeks and take some heat out of five-year and longer fixed pricing in particular, since those products are most sensitive to long-end yields. Two-year fixes, which track shorter-dated swaps more closely, may see less benefit.
The caveat: one day’s gilt rally is not a trend, and the Bank has stressed the change is technical rather than a signal about where Bank Rate is heading. Brokers advising clients on remortgage timing should treat this as a reason to watch swap pricing closely over the next fortnight rather than a green light to promise falling rates.
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Trackers and SVRs: no change, as expected
Anyone on a tracker or Bank Rate-linked deal sees no movement at all, that’s not surprising, since the Bank Rate itself didn’t move. Standard variable rates, which move at lender discretion rather than automatically, are also unlikely to shift in the short term. Worth flagging to clients: SVRs have historically lagged base rate changes in both directions, so there’s little reason to expect lenders to move here off the back of Thursday’s decision alone.
The commercial and buy-to-let angle
The gilt yield move matters more, proportionally, for buy-to-let and commercial borrowers, where longer-dated funding costs and swap pricing tend to play a bigger role in underwriting. Duncan Kreeger, chief executive of bridging and commercial lender TAB, welcomed the hold on the grounds that rising bond yields were already doing some of the economy-cooling work a rate rise would otherwise do. That’s a dynamic that, if the gilt rally sticks, could ease slightly for landlords who’ve been squeezed by both higher borrowing costs and continued regulatory change.
