President Trump announced a 90-day pause for some nations threatened with higher tariffs – barring China, whose tariffs were raised to 125%.
The UK was not one of the countries whose tariffs were paused, as the tariffs imposed were a 10% baseline tariff, which remains in place.
There are questions now over whether this means the Bank of England is more or less likely to cut the base rate, which would then change the trajectory of swap rates and influence mortgage pricing.
Ian Futcher, financial planner at Quilter, said the introduction of tariffs had “sparked global economic uncertainty” and increased expectations that the Bank of England could be forced to cut interest rates to “help stimulate growth”.
He continued: “The recently announced pause does change the picture slightly, but there is still a huge amount of ambiguity in how things will play out. This shift in outlook has already begun to feed through into UK swap rates – the mechanism that helps price fixed rate mortgages.
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“As swap rates have dropped, some lenders have moved to cut mortgage rates, with more likely to follow if market conditions persist. Homeowners with variable or tracker deals could benefit further should the Bank of England act.”
Futcher said those on fixed rate mortgages should “plan ahead”, and ideally borrowers should have their paperwork in order at least six months before their current deal ends.
“That allows them to move quickly and secure a competitive rate as they approach the end of their term. With mortgage pricing often fluctuating in response to economic news, being ready to act early can make a significant difference to monthly repayments. A conversation with a mortgage adviser can help ensure no opportunity is missed,” he added.
Laith Khalaf, head of investment analysis at AJ Bell, said it’s “really too early to tell what the effect of Trump’s tariffs will be on mortgage rates, because markets are still bouncing around like a slinky on a trampoline”.
He added: “Swap rates have fallen since the announcement of tariffs, but lenders will probably wait to see if the fall is sustained before rushing to push out fresh rates. That said, if a few big players come out and cut rates, that could lead to the rest of the herd following suit.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said that while markets are currently pricing in a rate cut at the next Monetary Policy Meeting in early May, it may be “too early to call”.
“The central bank has adopted a cautious approach towards lowering rates so far, as rate-setters remain concerned about sticky price pressures.
Bank of England Deputy Governor Sarah Breeden said on Thursday that tariffs will impact UK growth with policymakers also carefully monitoring the impact on the pound and inflation.
“A growing number of mortgage lenders have lowered rates this week in response to uncertainty caused by US President Donald Trump’s tariff war as expectations of further interest rate cuts increase. That’s good news for prospective buyers and homeowners about to refinance. But volatility in the financial markets is still very much with us, so whether those mortgage rate cuts will continue will depend on how interest rate expectations play out from here. As the turbulence this month has already shown us, things can change very fast,” she explained.
