Despite recent increases due to the conflict in the Middle East, swap rates are still lower on a year-on-year basis, meaning the overall lending landscape remains more favourable for borrowers than it was this time last year according to Octane Capital.
Octane analysed the average daily swap rates seen since the start of the Iran conflict on 27th February and found that both one year and five year swap rates have increased since the start of the Iran conflict, with the average daily one year swap rate rising by 0.26%, whilst the average daily five year swap rate has increased by 0.22%.
Despite these recent increases, the broader mortgage landscape remains in a stronger position than it was this time last year, as average daily swap rates between 1st January and 16th March show that the average one year swap rate has fallen by 0.59% compared to the same period in 2025, while the average five year swap rate is down 0.30% year-on-year.
Jonathan Samuels, CEO of Octane Capital, said: “Global events will always have a ripple effect across financial markets, and the recent escalation in tensions in the Middle East is no exception, with swap rates reacting accordingly in the short term.
“Given this recent upward movement, it would be no surprise to see the Bank of England hold the base rate in the near term as it assesses the wider impact of these developments, however, it’s important to keep this movement in context.
“While swap rates have edged up in recent weeks, they remain notably lower than they were at the same point last year, and this is what continues to support a more favourable borrowing environment overall.
“Short-term fluctuations will always occur, particularly in response to geopolitical events, but the underlying trajectory of the market remains far more stable and supportive than it was this time twelve months ago.”
These reductions are notably larger than the increases seen since the start of the Iran conflict, highlighting that recent upward movement in swap rates represents a short-term reaction rather than a reversal of the wider downward trend seen across the mortgage market.
