The reduction in swap rates following the latest base rate cut by the Bank of England has generated optimism in financial services.

Octane Capital analysed the latest figures on five year swap rates to reveal how they are currently trending and what this means for the wider property market when it comes to mortgage affordability.

The analysis shows that, so far this year, swap rates have been trending downwards.

The research shows that since the Bank of England cut interest rates to 4.5%, the average five year swap rate has sat at 4.16.

Prior to this base rate cut, five year swap rates had sat considerably higher, averaging 4.23% between the autumn Budget and the end of last year, before climbing to 4.31% in early January this year.

Further analysis shows that whilst it’s still relatively early days, the nation’s borrowers are already benefiting from reducing swap rates.

In 2024, the average buy-to-let mortgage rate sat at 4.53%, but had fallen to an average of 4.38% in January of this year, whilst the average mortgage rate offered to owner occupiers has fallen to 4.65% in 2025 vs an average of 4.81% seen in 2024.

A spokesperson for the finance firm says: “Not only have we seen swap rates trending downwards so far this year, but this is a trend that will have been strengthened by the Bank of England’s decision to cut the base rate to 4.5% last week and some industry sources are already showing 5 year swap rates having fallen below the 4% threshold, which is big news.

“We’ve also seen lenders act with greater confidence, choosing to reduce mortgage rates in anticipation of the recent interest rate cut and this simply wasn’t the case during the closing stages of last year despite us seeing two base rate reductions.”