Jonathan Samuels, CEO of Octane Capital, believes that improving economic stability towards the end of the year is beginning to translate into more favourable funding conditions for borrowers, as the firm’s latest analysis shows a steady decline in swap rates following a series of key economic events.
The latest research from the specialist lender analysed the average daily level of the 1 Year GBP Interest Rate Swap following a series of key economic milestones since September of this year, including successive bank rate holds, easing inflation data, and the Autumn Budget, to assess how improving economic conditions have influenced market confidence.
The research shows that during September of this year, prior to the Bank of England’s decision to hold the base rate on the 18th, the average 1 Year swap rate was sitting at 4.09%. Following the decision to keep the base rate held at 4%, swap rates eased slightly, averaging 4.07% through to the release of October’s CPI figures.
With October’s CPI figures showing inflation holding steady, confidence continued to improve and swap rates fell more noticeably, averaging 3.90% in the run-up to the next Bank of England decision in early November. That decision to again hold rates helped reinforce expectations that borrowing costs had peaked, with the average swap rate edging down further to 3.89%.
As inflation data later in November showed signs of easing, swap rates continued to drift lower, averaging 3.87% in the period leading up to the Autumn Budget.
The Budget itself provided further stability and in the weeks that have followed, the average 1 Year swap rate has fallen again to 3.84%.
Taken together, the sequence of base rate stability, cooling inflation, and greater fiscal clarity has driven a steady reduction in swap rates since September, pointing to a far more constructive funding environment heading into the new year.
For borrowers, this trend is particularly significant. Swap rates underpin the pricing of fixed-rate lending, and sustained reductions feed directly into lower funding costs, improved deal viability, and greater certainty when planning projects. This is especially relevant across specialist lending markets such as bridging, refurbishment, and development finance, where speed, flexibility, and short-term pricing are critical.
According to Octane Capital, the downward movement in swaps suggests that lenders are entering 2026 with greater confidence, improved funding lines, and more scope to support borrowers who are looking to act early in the new year. For developers and investors, this provides a more constructive backdrop following a prolonged period of volatility.
Jonathan Samuels, CEO of Octane Capital, commented:
“Swap rates are one of the clearest indicators of how the market is feeling about the future, and the consistent downward movement we’ve seen since September is genuinely encouraging. A combination of inflation easing, base rate stability, and greater fiscal clarity following the Autumn Budget has helped restore confidence, and that’s now filtering through to funding costs.
For borrowers operating in the specialist finance space, this matters enormously. Lower swaps support more competitive pricing, stronger deal viability, and better forward planning across bridging, refurbishment, and development finance. As we head into the new year, the direction of travel is far more positive than it has been for some time, and it sets the market up well for a more active and confident start to 2026.”
