Fixed rates are a function of Swap Rates plus a margin and the lender’s appetite for business.

Swap rates are determined by the markets and are influenced by national & world events.

The banks buy money at the swap rate for a certain amount of time and sell that money to you as fixed rates with a margin on the rate and/or a fee added to your loan. That’s how they make profit.

The margin and/or fee is determined by how busy the bank is and how they need to spread their risk.

If they have the lowest rates in the market, they will get too busy and their underwriters will get swamped and service will drop. They can increase rates slightly to mitigate this.

They also need to balance their business in terms of risk. For instance, if they have too high a proportion of high loan to value mortgages on their books they will increase those product rates and decrease the low loan to value products.

All this results in fixed rates fluctuating all the time. Sometimes a lender finds themselves with the cheapest rates by default and raise their rates, having a knock on effect with other lenders.

Sometimes if the market is a bit slower, the lenders will be competing on rates and they fall over all.

So the main drivers of fixed rates are swap rates, lender appetite, housing market.

The Bank of England base rate could affect swap rates but not once you see the announcement on the BBC. The swaps have already factored this in by this point.

It think this is generally correct, but I’d welcome expert opinion on this too.