As of 28 May, the two-year swap was 3.84%, up from 3.59% last month, while the five-year swap was 3.86%, compared to 3.61% in April. MPowered Mortgages said this was a result of a reaction to trade agreements, better-than-expected GDP and higher inflation.
Recently, the likes of Barclays, HSBC, Santander, TSB and Nationwide have put their mortgage pricing up.
MPowered Mortgages has lowered three-year fixed rates for new purchase borrowers at 65% loan to value (LTV), with pricing now at 3.93% with a £999 fee. At 80% LTV, this is priced at 4.25%.
Rates have also been lowered across remortgage deals.
Changes will be effective from 2 June.
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Peter Stimson, director of mortgages at MPowered Mortgages, said: “Our three-year fixed rates offer exceptional value in the market at present. Whilst many other lenders have been increasing rates in response to rising swaps and have been effectively playing ‘catch-up’, we have chosen to price our products closer to the swap curve, which has allowed us to make further cuts to our mortgage fixed rate range.
“We feel three-year products offer a good choice for many customers, not only in terms of offering some great rates, but also in terms of offering customers a real alternative for those caught between the uncertainty of choosing a two- or five-year product.”
He added: “Swaps are still volatile and there is no guarantee how long current deals will be around, so you may need to act fast if you want to secure a deal at today’s rates. We would urge borrowers to always speak to a broker first before deciding on a mortgage deal, especially during this period of uncertainty.”
Virgin Money and Clydesdale Bank enhance affordability
Virgin Money and Clydesdale Bank have announced a reduction to the stress rate applied to residential mortgage applications for either fixed or variable rate products of fewer than five years.
The lenders said this would allow people to borrow more; for example, joint borrowers with a combined income of £85,000 can access up to £40,000 more than previously.
This is in response to the Financial Conduct Authority (FCA) confirming that lenders could be flexible with mortgage affordability to improve access.
Nick Mendes, mortgage technical manager at John Charcol, said: “Banks are allowing borrowers to stretch their finances further because the regulatory environment has shifted. Recent guidance from the FCA encourages lenders not to unduly restrict access to mortgages that are affordable, especially as interest rates begin to stabilise. In response, many lenders have adjusted their stress testing, meaning borrowers can now access larger loans based on their actual affordability rather than artificially inflated scenarios. For some, particularly first-time buyers with stable incomes, this could be the change that allows them to finally get on the housing ladder.
“However, the Bank of England’s long-standing cap on high loan-to-income (LTI) lending – the 15% rule – remains in place. Introduced over a decade ago to limit systemic risk in the wake of the financial crisis, it now sits awkwardly alongside stricter stress testing and more robust capital requirements. As a result, there’s a tension: while more borrowers now qualify under the updated affordability criteria, lenders are constrained in how many of those loans they can actually issue. This often forces difficult decisions and can skew support towards higher-income borrowers or larger loans, rather than helping first-time buyers.
“There’s no doubt the changes reflect a more accurate and arguably fairer view of affordability, removing some of the overly cautious buffers that were shutting people out. For many, it’s a welcome shift. But it’s not without risk. Higher borrowing – even if technically affordable today – leaves households more exposed to future financial shocks, whether through rising rates or changes in personal circumstances. If too many borrowers take on more debt simultaneously, it could reintroduce the very vulnerabilities the original rules were designed to prevent.”
He added: “Will it lead to more completions among first-time buyers? Likely, yes. But there may also be broader market consequences, including upward pressure on house prices, particularly in already supply-constrained areas. That’s why it’s important to see these changes in context: they may help some buyers across the line, but they’re not a silver bullet. Without tackling the underlying issues – namely, high prices and limited supply – long-term affordability will remain out of reach for many.
“Ultimately, this shift is about adapting to current conditions. But responsible lending and clear financial advice remain critical. Just because someone qualifies for a bigger loan doesn’t necessarily mean it’s the right decision for them in the long run.”
