Falling swap rates give a boost to developers looking to refinance projects in 2026, according to Jonathan Samuels, chief executive of Octane Capital.

Samuels said improving funding costs help improve viability and restore confidence across the specialist lending market.

Octane Capital analysed the average daily one and five year GBP interest rate swap rates so far this year and compared them to the same period this time last year, as well as reviewing average daily swap rate movements over the last three months versus the previous three-month period.

The research shows that so far this year, the average daily one year swap rate has sat at 3.77%, while the average daily five year swap rate has averaged 3.94%.

This marks a notable reduction on the same period last year, when the one year swap rate averaged 4.44% and the five year swap rate averaged 4.29%, representing declines of 0.67 and 0.35 percentage points respectively.

This downward trend is also apparent when analysing the average daily swap rate seen over the last three months when compared to the previous three-month period.

Over the last three months, the average daily one year swap rate has reduced to 3.84%, down from 4.04% previously, while the average daily five year swap rate has also fallen, easing from 4.02% to 3.92%.

Octane pointed out that swap rates play a critical role in determining the cost of property finance, particularly when it comes to refinancing completed developments or transitioning from short-term funding onto longer-term lending.

As swap rates fall, lenders are able to price more competitively, improving affordability and making refinancing more accessible for borrowers.

According to Octane Capital, this is particularly important for developers approaching the end of a project, where development exit finance can provide the time needed to sell units in a more orderly manner or refinance onto longer-term facilities without being forced into discounted sales.

Samuels (pictured) said: “The reduction in average daily swap rates since the start of the year is a very encouraging sign and reflects the fact that the wider lending environment is continuing to stabilise.

“For developers, this has a direct impact on their ability to refinance completed schemes. Lower swap rates support more competitive exit finance pricing, which in turn gives developers greater flexibility and breathing space when it comes to repaying existing facilities and securing longer-term funding.

“After a challenging period where higher funding costs restricted refinancing options, we’re now seeing improving conditions that are helping to unlock projects and support delivery.”