Swaps surge forces up rates on Yorkshire BS’s flagship five-year fixes

Yorkshire Building Society is set to increase two of its keenest-priced five-year fixed rates due to a recent surge in five-year swap rates.

From Monday, the lender’s 2.49 per cent five-year fix to 65 per cent LTV will increase to 2.59 per cent. It has a £1,345 fee.

The lender will also increase its 2.79 per cent five-year fixed rate, also available to 65 per cent LTV, by 5 basis points to 2.84 per cent. This products has a £345 fee.

A spokeswoman says: “We have decided to increase these products on the back of increases to five-year swaps.”

Swap rates, which lenders use to hedge potential interest rate rises and are closely linked to mortgage pricing, spiked in June after the US Federal Reserve hinted it could wind up its programme of quantitative easing.

However, five-year swaps, in particular, fell back to 1.34 per cent by the middle of July.

Since then they have shot back up to 1.85 per cent – the same as June’s peak – leading some commentators to suggest mortgage rates have bottomed out and consumers should expect to see rates increase.