IMLA has published a report and five-minute guide to help advisers explain how swap rates affect fixed-rate mortgage pricing.
The Intermediary Mortgage Lenders Association said the publications are designed to help advisers, and others in the mortgage market, explain why fixed mortgage rates do not necessarily move in line with the Bank of England’s Bank Rate.
IMLA said many borrowers assume fixed-rate mortgage pricing follows Bank Rate, when fixed-rate products are instead priced using swap rates. These are set by financial markets and can move quickly in response to global events, sometimes forcing lenders to reprice or withdraw products at short notice.
The association said the issue remained one of the most common sources of confusion for borrowers and could be difficult for advisers to explain quickly.
IMLA said the point was illustrated in early 2026, following the outbreak of conflict involving the US, Israel and Iran. Two-year swap rates rose from about 3.6% in early March to more than 4.5% by early May, while average two-year fixed mortgage rates rose from 3.97% to 5.14% over the same period. Tracker mortgage rates, which follow Bank Rate directly, were unaffected.
The main report, How lenders fund fixed-rate mortgages: Swap rates explained, was written by Rob Thomas, principal researcher at IMLA and a former economist at the Bank of England.
It explains how most UK lenders fund themselves through deposits and other variable-rate sources, how the swap market allows them to offer fixed-rate mortgages, and why sharp movements in swap rates can lead to product withdrawals.
IMLA has also published Swap Rates Explained: A Five-Minute Read, a shorter guide for advisers who want a more concise explanation for client conversations.
Kate Davies, executive director of IMLA, said: “Swap rates have become part of the everyday language of the mortgage market, yet they remain poorly understood outside a relatively small group of specialists.
“When mortgage rates rise or products are suddenly withdrawn, borrowers want answers, and advisers need to be able to provide them confidently.
“The problem is that the real explanation – that fixed-rate mortgage pricing follows swap rates, not Bank Rate – is not well understood even by many professionals.
“Rob’s report provides a clear and authoritative account of how fixed-rate mortgages are funded and why swap rates play such a central role in their pricing.
“We recognise that not everyone wants to work through a detailed technical paper, which is why we have also produced a five-minute guide covering the essentials. Together, the two publications give advisers the material they need to have that conversation with confidence.”
Both publications are available to download free of charge from the IMLA website.
