Trump's Tariffs Trigger Fall in UK Mortgage Rates as Market Reacts
Global economic tensions sparked by new U.S. tariffs lead to a drop in swap rates, paving the way for cheaper fixed-rate mortgages in the UK.
Recent developments indicate that UK mortgage rates are poised to decline following the implementation of U.S. President Donald Trump's new tariffs, which have sent ripples through global financial markets.
The introduction of these tariffs has heightened fears of an economic downturn, leading to increased expectations that the Bank of England will reduce interest rates to stimulate growth.
Specifically, Sonia swap rates—a key indicator of future mortgage rate trends—have experienced a notable decrease.
As of Monday, five-year swaps fell to 3.63%, down from 3.97% prior to the tariff announcement, while two-year swaps declined to 3.66% from 4.02% in the same period.
This downward trend suggests that fixed-rate mortgage deals are likely to become more affordable if swap rates remain at these levels.
In response to these changes, MPowered Mortgages has proactively adjusted its offerings, becoming the first lender to reduce its full suite of fixed mortgage rates. Effective from 9 a.m. today, their new rates include:
- **Two-year fixed rates**: Starting at 4.05% for 60% loan-to-value (LTV) with a £999 fee, and 4.29% with no fee.
- **Three-year fixed rates**: Starting at 4.04% for 60% LTV with a £999 fee, and 4.15% with no fee.
- **Five-year fixed rates**: Starting at 4.14% for 60% LTV with a £999 fee, and 4.28% with no fee.
Stuart Cheetham, CEO of MPowered Mortgages, commented on the situation:
"Since Trump announced the 'Liberation Day' tariffs, we have seen a sharp fall in the swap rates, which has enabled us to reduce our fixed-rate mortgage rates."
He also acknowledged the broader economic implications:
"Whilst these tariffs could have a detrimental impact on the UK economy, with increased prices putting extra strain on UK households, there is a silver lining for mortgage borrowers who will see rates come down over the coming week."
Cheetham advises borrowers to consult with independent financial advisors to determine the most suitable mortgage deals in light of these developments.
As the global economic landscape continues to evolve, particularly with the introduction of new trade policies, UK borrowers are encouraged to stay informed and consider their options carefully when navigating the mortgage market.