Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in and we’ll get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at [email protected].
Question: I know mortgage rates have started to fall in recent days after Donald Trump’s tariff plans increased the number of interest rate cuts expected this year. But now the plans have been rolled back on somewhat, do we think the mortgage reductions will go into reverse?
Answer: When Donald Trump first unveiled sweeping new tariffs, markets braced for impact. The proposal was bold, targeting almost all imports from major trade partners including the UK, and the reaction was immediate.
Investors feared the start of a global trade war that could push up prices and drag down economic growth. Within days, expectations around interest rates shifted dramatically, with many predicting that the Bank of England would have to step in and cut rates to help steady the ship.
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Since then, however, the mood has changed. Trump has stepped back slightly, announcing a 90-day pause to allow for more negotiations.
At the same time, US Vice-President JD Vance has been talking up the possibility of a UK-US trade deal, which has helped calm the waters. Naturally, that has prompted many to ask whether mortgage rates will still fall as sharply as first expected.
The short answer is yes, but perhaps not quite as quickly.
While the immediate panic has eased, the underlying uncertainty remains. The global economy is still in a delicate position and although the tariffs have been delayed, they have not been scrapped. There is no real clarity yet on where things are heading. Trump’s style of policymaking has always been unpredictable, and this latest episode only reinforces that.
Markets are still pricing in further interest rate cuts from the Bank of England. At the start of the year, expectations were for perhaps two reductions. Now, despite the temporary pause in the US, markets believe we could see as many as four cuts this year. If that plays out, the base rate could fall from 4.5 to 3.5 per cent. That in itself would open the door to more affordable borrowing, particularly for mortgage customers.
And we are already starting to see some of that filter through. Swap rates, which lenders use to price fixed-rate mortgages, have fallen noticeably. That has allowed several lenders to offer more competitive deals, including fixed rates under four per cent. For those looking to buy or remortgage, that is a positive development.
However, not every lender has rushed to follow. Some are still being cautious. Many agreed mortgage deals in recent weeks at higher rates, and they will be wary of cutting too quickly in case customers who have not yet completed try to switch mid-process to cheaper options. That can create logistical headaches and potential financial losses. So while rates are falling, we are likely to see a staggered response from lenders rather than a coordinated drop across the board.
In practical terms, what does this mean if you are a homebuyer or remortgager?
The outlook remains favourable, but timing will be important. If you are in a position to act now, it is worth exploring your options, especially as some very attractive deals are beginning to appear. But it is equally important to stay flexible. Markets are still nervous and global events could shift things again. If trade talks stall or inflation surprises to the upside, we could see sentiment move the other way.
Speaking to a mortgage adviser or broker is a smart move in this environment. They can help you track which lenders are adjusting rates in real time and make sure you are not missing out on a deal that suits your needs.
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