The Big Interview: 'The MPC is a talking point – swap rates are what drives our pricing'

With the Bank of England's Monetary Policy Committee (MPC) due to meet on 18 June, the mortgage industry is watching closely. But for Graham McClelland (pictured top), chief executive of Gen H, the headline rate decision is largely beside the point.

"It's not really about what happens with the headlines," McClelland told Mortgage Introducer. "It's what happens in the minutes that follow."

The consensus expectation is a hold at 3.75%, where the base rate has sat since December, with some forecasters now predicting rises towards the end of the year. McClelland broadly agrees with the hold prediction, but his focus lies elsewhere.

McClelland took the helm at Gen H in May 2025, succeeding co-founder Will Rice. He joined the London-based fintech mortgage lender in 2021 as chief commercial officer before serving as both deputy CEO and chief financial officer. The perspective he offers on the rate debate is measured, granular, and focused on mechanics rather than narrative.

Swap rates are what lenders actually watch

For McClelland, the real pricing signal is not the base rate but the swap rate – the market rate at which lenders fund their fixed-rate products.

"We care about swap rates because that is what our cost of funds are linked to," he said. "Where the swap rate is at any given point in time, not where the Bank of England has its base rate. The two things are obviously linked, and one is a future prediction of the other, but it's changes to the swap rate that really impacts where we are day to day."

At Gen H, the lender monitors swaps daily and typically reprices weekly, tracking movement in the swap curve rather than anticipating MPC decisions. "That pricing really doesn't focus on the MPC, it focuses on swap rates."

That discipline has been tested this year. Swap rates have been exceptionally volatile, moving as much as 50 basis points in a single session. "The MPC hasn't moved rates higher, but mortgage pricing has gone up," McClelland said. "What has happened is with the market expectation of higher rates, swap rates have moved immediately, and lenders have moved immediately, including ourselves."

It is a distinction that matters for brokers advising clients on timing. Fixed mortgage pricing can move ahead of, or independently of, MPC decisions – a dynamic McClelland said should inform how the industry reads rate commentary.

Global uncertainty is the real variable

Asked how the broader geopolitical picture feeds into Gen H's thinking, McClelland is direct. "Global uncertainty is probably the single biggest input into our pricing in that it has such a big impact on our cost of funds, which is linked to the swap rate."

The key transmission mechanism is energy. The UK's exposure to global energy markets means conflicts affecting supply feed directly into inflation and, eventually, monetary policy. "When you see volatile energy prices, you will see very volatile output energy prices, which will then lead to big inflation in the UK. There just has to be, and how much of that is the big uncertain."

Combined with domestic political uncertainty, including a possible change of Prime Minister and the US midterm elections, McClelland expects volatility to persist regardless of what the MPC decides next week. Gen H's response is deliberate passivity on prediction. "We very purposely built a business where we try to minimise the amount of risk we take that is linked to interest rates. We are a price taker."

What rate cuts actually mean for first-time buyers

Gen H's core focus is owner-occupier lending, with a particular emphasis on first-time buyers – a cohort served since the lender's founding in 2019 through products including its Income Booster and Deposit Booster. McClelland offers a more nuanced take on the impact of rate movements on this group than the headline narrative typically allows.

"Absolute affordability isn't necessarily the determinant of whether they get a mortgage and a house or not," he said. "It is more the determinant of which mortgage, and which house they get."

In his view, the demand for homeownership is largely rate-insensitive at the margin. Lower rates may shift the timing of a purchase or the type of property targeted, but rarely the underlying ambition. On affordability assessments, the swap-rate logic applies equally. "We're looking at what the market is pricing in, where swap rates are, where expectations of interest rates are over the short, medium and long term, and that inputs into both our pricing today but also how we think about affordability over the long term."

Don't time the market – buy when it makes sense

For borrowers weighing up whether to act in the second half of 2026, McClelland's advice is straightforward. "Don't speculate. If you want to own a home, have a look at what's available and what's affordable to you, and if it matches what you want, go ahead."

He points out that renting offers no protection from rate volatility either. "Your landlord will have a mortgage, and they will need to pay that mortgage. If rates go up, your cost of rent will have to go up."

The broader message is to engage with a good adviser and focus on individual circumstances rather than macro commentary. "I can't remember a time where there has been more options and more people trying to do new things," McClelland said. "People should be open to exploring everything that's out there and making decisions that are right for them."

That includes being clear-eyed about what MPC decisions do and do not mean for the cost of buying a home. "You shouldn't be making those decisions on the load of hot air that comes out every time the MPC makes a change to rates."

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