Last week we wrote that the broker-panel refresh looked like lenders catching up with late-September swap levels, and that on past form the lag still pointed up. A week later, the part of the market we watch most closely has not moved at all. That does not prove the lag has run its course, but it is not what we expected.
Swaps eased across the curve this week. The five-year is now around 4.75%, about six basis points lower than last week’s record reading. The two-year is around 4.6%, down about three, and the three-year is a little above 4.7%, down about five. The ten-year fell furthest, by about ten basis points, and is back below 5% at a little over 4.9%. Last week’s rise has been partly given back but not entirely. The five-year is still above where it was at the start of the month and within the same fifteen basis point band it has held for about a month. The curve has flattened slightly at the long end. The short end has barely moved.
The broker-panel lists refreshed again early this week. All of the change was in the highest loan-to-value tier. Some very large-fee two-year options that bought a much lower headline rate have gone. A few fee-led five-year options have been added, and some two-year products moved by around ten basis points, mostly up. At seventy-five per cent loan-to-value, every two-year and five-year product is at the same rate and fee as last week. That includes the fee-free five-year pricing, which has now been flat for three weeks. The changes at the top tier look like a reshuffle of fee structures more than a general move in price.
The direct lender we follow most closely has still not issued a new guide. Its whole-range reprice in mid-September is now a month old.
Two cautions. First, a six basis point fall on the five-year is about the size of the fall two weeks ago, and that one reversed within a week. We would not read a direction into it yet. Second, our secondary swap source has refreshed, but it still shows a date from early October, and its figures do not line up with what it showed last week for the same period. We have not used it, so the swap levels above rely on a single source again.
The Budget at the end of October is now about two weeks away. Last week a partial refresh suggested that some lenders were not waiting for it. This week, the part of the market that matters most to us looks like it may be. Holding still on a week when swaps eased is consistent with that. It is also consistent with lenders being comfortable with prices that were set when swaps were a little higher.
The practical reading has barely changed. 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. It is close to where it was a week ago and still well above its summer levels. We would still budget on rolling onto something materially higher than today. Swaps easing while shelf prices hold still is mildly encouraging. It is not a reason to change that assumption.