The Intermediary Mortgage Lenders Association (IMLA) has published a five-minute report and guide to help mortgage advisers understand swap rates and their impact on fixed-rate mortgage rates.
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The new publications are designed to help fill any knowledge gap on how mortgages are priced, IMLA said.
The importance of swap rates was highlighted in early 2026 after the outbreak of conflict between the United States, Israel and Iran. Between early March and early May, two-year swap rates rose from about 3.6% to more than 4.5%.
During the same period, average two-year fixed mortgage rates increased from 3.97% to 5.14%. This represents an increase of more than 1.1 percentage points. Mortgage rates that directly follow the bank rate are not affected.
main report, How Lenders Fund Fixed-Rate Mortgages: Swap Rates ExplainedWritten by Rob Thomas, Principal Researcher at IMLA and former Bank of England economist.
The report explains how lenders finance fixed-rate mortgages. It identifies the role of deposits and other sources of variable rate financing. It also examines how the swap market allows lenders to offer fixed-rate products and why changes in swap rates can lead to rapid repricing.
Second post, Swap Rates Explained: Five-Minute Readprovides a shorter summary. It’s designed for advisors who need simple explanation of client conversations.
Kate Davies, chief executive of IMLA, said: “Swap rates have become part of the everyday language of the mortgage market, yet are still poorly understood outside a relatively small group of specialists.
“When mortgage rates rise or products are withdrawn, borrowers want answers. Advisors need to be able to explain what is happening.
“The key point is that fixed-rate mortgage pricing follows swap rates, not swap rates Bank rate. Robb’s report explains how fixed-rate mortgages are financed and why swap rates play such an important role.
“We know that not everyone has the time to read a detailed technical paper. That’s why we’ve also produced a five-minute guide. Together, the two publications provide advisors with the information they need to explain these issues with confidence.”
Both publications can be downloaded for free From the IMLA website.
