Swap Rate Surge Sparks Mortgage Hike Fears Ahead of BoE Decision

Homeowners are bracing themselves for higher mortgage costs this week as swap rates reach a three-year high.

The uncertainty in international bond markets is causing volatility that's affecting Britain's loans market, prompting banks and building societies to raise their rates.

Coventry Building Society was the first to act last week, followed by others.

Huw Pill, Chief Economist at the Bank of England, who is a member of the Monetary Policy Committee (MPC), thinks it's time for an interest rate increase. He said, 'We cannot wait for uncertainties to resolve themselves before acting.'

The MPC meets next week to make its decision, and a 'hold' vote might be the best outcome for homeowners.

Currently, the average two-year fixed rate mortgage is 5.59%, while a five-year fixed deal costs 5.63%.