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Swaps rate increases forces Platform to increase fixed rate pricing

Platform, the intermediary arm of the Co-operative Bank, has put up the price of all of its fixed rate mortgages following erratic movements in swap rates.

On average, the lender has increased its two-year rates by 0.33 per cent, while three-year and rive-year rates have been increased by 0.46 per cent and 0.68 per cent, on average, respectively.

Some of the changes include a 0.2 per cent increase to one of its two-year fixed rates at 80 per cent LTV to 3.25 per cent and a five-year fixed rate to 80 per cent LTV by 0.56 per cent to 4.25 per cent. Both have £995 fees.

A Platform spokeswoman says: “The intermediary mortgage market remains very much part of our plans and focus for the future, however we have needed to act in line with market changes at this time, particularly with the ongoing increases to swap rates, which has a direct impact on the cost of funding our mortgages.”

Swap rates, which lenders use to hedge potential interest rate rises and are linked to mortgage pricing, spiked after the US Federal Reserve hinted on 19 June it could wind up its programme of quantitative easing.

Two and five-year swaps jumped 26 basis points and 51 points to 1.01 per cent and 1.85 per cent between 17 and 24 June before falling back to 0.82 per cent and 1.55 per cent yesterday.

Experts have warned lenders could start putting up rates on fixed rates or pulling them altogether if volatility in swap rates continues as it has done in the past fortnight.

Speaking to Money Marketing earlier this week, former Council of Mortgage Lenders senior policy manager Rob Thomas said: “If the markets are very choppy, you, as a lender, might chose not to offer fixed rates because there is potential that you could fix in your funding costs to do a tranche of fixed-rate mortgages and then not be able to sell it.”

In the past two weeks, Paragon pulled its entire range of fixed-rate products while Skipton, Newcastle and Coventry building societies increased the rates on selected fixed-rate products.

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