News at Ware & Co | 21/07/2023

  • Swap rates give us a good indication of changes to come in mortgage costs – reflecting the cost of borrowing for lenders.
  • The 5-year swap rates had settled to around 4% for much of the first half of the year but from May it trended upward (peaking at 5.5%) over concerns about core inflation.
  • Data released on July 19th brought some relief to this upward trend. June inflation data was better than expected. Headline inflation was 7.3% and core inflation 6.4%.
  • This better news on inflation filtered through into lower interest rates on 5-year swaps, dipping back below 5%.
  • Data could be volatile over the next few months, but this is a good initial indication that inflation is starting to come down.
Source: #Dataloft, Investing.com