Swap rates show fall in borrowing costs

Swap rates show fall in borrowing costs

In this speed read, we take a quick look at the swap rates which reflect the borrowing costs for lenders

  • Recent political instability added to volatility in the financial markets has pushed up the cost of borrowing.
  • Swap rates are a good indicator of what to expect in borrowing costs because they reflect what borrowing costs for the lenders. 5-year swap rates rose to 5.6% after the mini budget but have since fallen back on the news of the Chancellor’s resignation and then again when the Prime Minister resigned.
  • Lower swap rates show financial market approval that the Truss Growth Plan was finally put to bed.
  • Overall, interest rates are definitely rising but recent volatility exaggerated the impact. Once the markets settle, there will be a clearer line of sight on interest rate expectations.
  • Source: Dataloft, UK investing.com


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