Following President Trump’s announcement of widespread tariffs, including a 10% levy on UK imports, traders are now anticipating steeper interest rate cuts from the Bank of England this year.
Market participants are increasingly expecting three rate cuts this year, suggesting that the negative economic effects of the tariffs on the UK are overshadowing other financial indicators. Amongst this global uncertainty this would be a potentially fantastic upside to property investors as mortgage rates plunge.
The Financial Times ran a really interesting piece on this some of which is reproduced below.
Mike Staton, director of Staton Mortgages, commented: “Being part of the mortgage industry for the past five years has given us a front-row seat to one crisis after another. While Trump’s actions might be hurting the global economy, they could ironically be helping to revive the UK housing market.”
This perspective was echoed by Stephen Perkins, managing director at Yellow Brick Mortgages, who noted: “There has been a delicate balance between supporting a struggling economy through rate cuts and keeping inflation in check. President Trump’s tariffs have disrupted that balance dramatically, damaging the global economy and increasing pressure on the Bank of England to lower rates further this year to cushion the UK economy.”
Emma Jones, managing director at Whenthebanksaysno.co.uk, highlighted the sharp decline in SONIA swap rates, with two- to ten-year rates dropping by seven to nine basis points overnight.
“Markets are now pricing in three rate cuts this year, and lenders are taking notice,” she said. “It’s not a dramatic shift yet, but this movement gives fixed-rate mortgage pricing some breathing space. If the trend continues, borrowers might soon benefit from more competitive deals. It’s a positive sign for those waiting on the sidelines.”
Riz Malik, IFA at R3 Wealth, added: “Although Trump’s trade moves have unsettled global markets, they may provide a silver lining for UK mortgage holders. Declining swap rates indicate that lenders could soon cut fixed mortgage rates, offering relief to homeowners already dealing with rising living costs and a tight budget.”
“While the full consequences of the US tariffs are still unfolding, a more competitive mortgage landscape could offer a much-needed boost for the UK housing sector.”
