Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

IMLA Publishes Guide to Help Advisers Explain Mortgage Rate Pricing

The Intermediary Mortgage Lenders Association (IMLA) has released a new guide to assist mortgage advisers in understanding and explaining how fixed-rate mortgage pricing is determined. The guide clarifies that swap rates, rather than the Bank of England’s base rate, are the main factor influencing the pricing of fixed-rate mortgage products.

The publication, titled "How lenders fund fixed-rate mortgages: Swap rates explained," was written by Rob Thomas, principal researcher at IMLA and former Bank of England economist. It details how most UK lenders fund fixed-rate mortgages using deposits and other variable-rate sources, and explains the role of the swap market in enabling lenders to offer fixed-rate products. The guide also addresses why sudden movements in swap rates can lead to the rapid withdrawal of mortgage products.

A shorter summary, "Swap Rates Explained: A Five-Minute Read," has also been published for advisers who need a concise explanation to use with clients. According to IMLA, these resources were developed to help advisers address common borrower misconceptions about how fixed-rate mortgages are priced.

The IMLA highlighted that the relationship between swap rates and mortgage pricing became particularly evident earlier in 2026, when two-year swap rates rose by almost 1% from March to May due to the outbreak of conflict in the Middle East. During the same period, average two-year fixed mortgage rates increased from 3.97% to 5.14%. In contrast, tracker mortgage rates, which follow the Bank of England base rate, were not affected by this volatility.

These new guides are intended to provide advisers with clear, authoritative information to support their conversations with clients about mortgage rate changes and product withdrawals.