Swap Rates Outpace Bank Rate for Fixed Mortgage Pricing

The Intermediary Mortgage Lenders Association (IMLA) has published a guide to help mortgage advisers explain why fixed-rate mortgage rates don't necessarily move in line with the Bank of England's Bank Rate. According to IMLA, many borrowers assume that fixed-rate mortgage pricing follows Bank Rate, but this is not the case.

The association explained that fixed-rate products are priced using swap rates, which are set by financial markets and can change quickly in response to global events. In early 2026, for example, two-year swap rates rose from about 3.6% to over 4.5%, while average two-year fixed mortgage rates increased from 3.97% to 5.14% over the same period.

IMLA's report, written by Rob Thomas, principal researcher and former economist at the Bank of England, explains how lenders fund themselves through deposits and variable-rate sources, and why swap rates play a central role in fixed-rate mortgage pricing.