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Paragon withdraws all fixed rate deals after swap rate spikes

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Paragon Mortgages has withdrawn its entire range of fixed rate buy-to-let deals after sharp increases in swap rates.

The specialist lender says there is no plans to re-launch the deals. Its tracker deals are still available through Paragon and Mortgage Trust.

Paragon director of mortgages John Heron says: “In light of current volatility in the swap markets we have withdrawn the current range of Paragon Mortgages and Mortgage Trust fixed rate products.

“We continue to offer a highly competitive range of tracker rates across both of our mortgage brands whilst we review fixed rate pricing.”

Swap rates have risen sharply in the last week as markets fear the withdrawal of Government support. The Federal Reserve has signalled it will begin to unwind its quantitative easing programme.

On May 3, five-year swap rates were 0.94 per cent. However, by Thursday 20 June, the day after Fed chairman Ben Bernanke said the US could end the programme by the middle of next year, they had reached 1.59 per cent, up from 1.34 per cent – 25 basis points more – on Monday 17 June.

Two-year swap rates have also climbed since early May, from 0.61 per cent on 3 May to 0.75 per cent on 17 June and 0.84 per cent on 20 June.

On Friday last week, 21 June, two and five-year swaps had increased again by 5 basis points and 8 basis points to 0.89 per cent and 1.67 per cent, respectively.

Both two and five-year swaps again shot up yesterday, with two-year swaps increasing to 1.01 per cent and five-year swaps to 1.85 per cent.

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