Swap rates increasing a lot? End of cheap long term borrowing?

topcat007

Hi ,

All i dont know a lot about this learning as i am going along.

But the swap rates seem to have gone up a lot, well what i assume to be a lot?

5 year 1 month ago: 1.02
5 year today: 1.21

10 year 1 month ago: 1.53
10 year today : 1.84

Could this mean the end of cheap fixed rate mortgages are coming to a end or will start increasing instead of the current war we are seeing between them all? Or is this fluctuation on a normal cycle?

Generali

topcat007 wrote: »

Hi ,

All i dont know a lot about this learning as i am going along.

But the swap rates seem to have gone up a lot, well what i assume to be a lot?

5 year 1 month ago: 1.02
5 year today: 1.21

10 year 1 month ago: 1.53
10 year today : 1.84

Could this mean the end of cheap fixed rate mortgages are coming to a end or will start increasing instead of the current war we are seeing between them all? Or is this fluctuation on a normal cycle?

Are those Sterling or USD rates? Seem a bit low to be Sterling although I've not looked for a while.

topcat007

Generali wrote: »

Are those Sterling or USD rates? Seem a bit low to be Sterling although I've not looked for a while.

They would be sterling rates

Generali

topcat007 wrote: »

They would be sterling rates

The FT bears you out:

http://markets.ft.com/research/Markets/Bonds



Markets are starting to price in rises in US interest rates in 6-12 months time rather than 12-18 as they have done since about 2011. Swap rates will also be getting dragged up by the unrelentingly good UK economic data. The unemployment figures are just getting better and better.

topcat007

Generali wrote: »

The FT bears you out:

http://markets.ft.com/research/Markets/Bonds



Markets are starting to price in rises in US interest rates in 6-12 months time rather than 12-18 as they have done since about 2011. Swap rates will also be getting dragged up by the unrelentingly good UK economic data. The unemployment figures are just getting better and better.

Thanks for the explanation

michaels

They do tend to fluctuate, about a year and a half ago they were very low and then they increased a bit when it looked like rates might rise a bit sooner than expected (remember at one point it was 50/50 that there would be an increase at the end of last year, the risk receeded due to the Euro area weakness and the deflationary impact of oil and food price falls). At some point the economy will stop bumping along the bottom and actually see a sustained recovery such as to push or incomes and prices at which point rates will rise, the longer rates move up and down as best guesses of when and how much short rates will rise fluctuate.