Last week we wrote that the reprice we had expected was more likely to fade away than to arrive, and that a quiet week after a rising month looked like the start of a plateau. Half of that held. The plateau, so far, has not.
Swaps rose across the curve. The five-year is now a little above 4.8%, about eight basis points higher than last week. That more than reverses last week’s fall and makes it the highest reading in our record, just above the late-September peak. The two-year is back around 4.6%, up about nine, and the three-year rose by about ten to just under 4.8%. The ten-year rose for a second week and has now reached about 5%. The gap between the three-year and five-year that reopened last week has narrowed again to a few basis points. Over the last month the curve has gone up and down, but each high has been a little above the last one.
The broker-panel lists we follow refreshed earlier this week, their first update since late September. Most of the movement was upward and small. The large-percentage-fee products at seventy-five per cent loan-to-value, which moved for the first time a fortnight ago, moved again by roughly five to ten basis points on both the two-year and five-year terms. Fee-free five-year pricing at that loan-to-value is unchanged. The clearest moves were in the highest loan-to-value tier, where several fee-free five-year products went up by between twenty and fifty basis points. A handful of new mid-fee options appeared and a few older ones dropped off, but the overall direction was not in doubt. This looks like lenders catching up with the late-September swap levels rather than responding to this week’s rise, so on past form the lag still points up.
The direct lender we follow most closely has not issued a new guide since its mid-September reprice, so its pricing is where we last described it.
Two things temper how far we read into this. First, a move of eight basis points in a week is real but not dramatic. Over the past month the five-year has moved within roughly a fifteen basis point band, and it has not broken out. Second, our secondary swap source has updated, but the date it shows is not plausible. We have not used it this week, so the swap levels above rely on a single source again.
The Budget at the end of October is now about three weeks away. Last week we wondered whether lenders had started waiting for it. This week’s refresh suggests that at least some of them have not.
The practical reading is the same as a fortnight ago, and slightly firmer than last week’s. Pricing secured before the summer still looks better than anything on offer today. For a short fix maturing in the next year or so, the two-year point matters most, and it has gone back to where it was in late September after last week’s easing. We would still budget on the assumption of rolling onto something materially higher than today. Last week we said the easing made that assumption slightly less pessimistic. This week took that back.