Swap rates have actually increased since the start of the Iran conflict, which in the long-lasting results in higher home mortgage rates.
Since the start of the war the average day-to-day 1 year swap rate increased by 0.26%, while the average daily 5 year swap rate increased by 0.22%, analysis from specialist lender Octane Capital has found.
Regardless of this worry, swap rates are still lower year-on-year.
Jonathan Samuels, chief executive of Octane Capital, stated: “Worldwide events will constantly have a causal sequence throughout monetary markets, and the recent escalation in stress in the Middle East is no exception, with swap rates reacting accordingly in the short term.
“Given this current upward motion, it would be no surprise to see the Bank of England hold the base rate in the near term as it assesses the wider effect of these developments, however, it’s important to keep this movement in context.
“While swap rates have actually edged up in recent weeks, they remain especially lower than they were at the very same point last year, and this is what continues to support a more favourable borrowing environment overall.
“Short-term changes will constantly take place, particularly in reaction to geopolitical occasions, however the underlying trajectory of the marketplace remains much more steady and encouraging than it was this time twelve months earlier.”
Between 1st January and 16th March the average 1 year swap rate has fallen by -0.59% compared to the same period in 2025, while the average 5 year swap rate is down -0.30% year-on-year.
These decreases are especially larger than the increases seen given that the start of the Iran dispute, highlighting that current upward motion in swap rates represents a short-term response instead of a reversal of the broader down pattern.