Angel Thomas
Principal Adviser, In2Equity Ltd
Everyone wants to know where mortgage rates are going. The honest answer is that nobody knows for certain, but the market gives us the best available guess, and right now that guess is 'flat to slightly lower over the next 12 months'.
Here is what is actually driving the pricing, what the swap market is telling us, and how to use that without betting the house on it.
What the swap market is pricing
Mortgage fixed rates are largely priced off swap rates, which reflect where the market thinks the base rate will be over the fix period. As of October 2026, the swaps are pricing roughly two cuts of 0.25% over the next year, taking the base rate toward 3.25%, but with a wide margin of error.
That is why two-year fixes sit in the low 4s and five-year fixes around 4.3% to 4.7%. The market is not pricing big falls, but it is not pricing rises either.
Why five years is not always safe
The conventional advice is 'fix for five years for security'. That is true if you think rates will rise, but if swaps are pricing falls, locking for five years means you may be stuck above the market for most of the term. Right now the gap between a two and a five-year fix is around 0.2% to 0.4%, which is the market charging you a small premium for the longer lock.
The honest approach
We do not bet your mortgage on a forecast. We compare the total cost of two, three and five-year fixes against where swaps sit, model the break-even if rates fall 0.5%, and let you choose with the real numbers in front of you. If certainty matters more than the small saving, we say fix for five. If the numbers say two years is cheaper even if rates only stay flat, we say that.
What changes the picture
A sharp rise in inflation, a Budget that spooks the gilt market, or a global shock can move rates fast. That is why we diary your fixed-rate expiry six months out and review the market then, so you lock when the numbers are right, not when panic sets in.
What we do
We show you the swap-implied path, the break-even on each fix length, and a clear recommendation for your risk appetite. No jargon, no 'trust me', just the maths.