An interesting divergence this week: funding costs haven’t fallen, but buy-to-let pricing has.
Swaps choppy, a touch higher than late June. The GBP SONIA swaps behind fixed-rate mortgage pricing are giving mixed signals day to day - one of our two sources ticked down, the other up - but both now agree on the level: two-year swaps around 4.05-4.1% and five-year around 4.15-4.2%. That leaves the five-year roughly 15-20 basis points above where it sat in late June, so the small borrower-friendly drift we noted earlier this month has partly reversed. Nothing dramatic, but the funding backdrop is not doing lenders any favours.
Buy-to-let pricing fell anyway. Despite that, the limited-company buy-to-let shelf we follow saw a broad repricing lower - a dozen or so products cut, only a couple nudged up, and some fresh fee structures appeared. In the class that matters to us (five-year fixed at 75% loan-to-value) every move was downward, with the sharpest fixed-fee options now sitting in the low 5s. Our own lender’s equivalent range is unchanged.
Our take: with swaps flat-to-higher, these cuts aren’t funded by cheaper money - lenders appear to be competing on margin, presumably chasing volume. That can persist, but it can also snap back quickly if swaps keep drifting up, so the window may not be a long one. The gap between the best of the market and our own lender’s pricing has widened rather than closed, which strengthens the case for a conversation with the broker sooner rather than later - while remembering that a headline rate from a rate sheet still has to survive lender criteria and full costing before it’s real.