Expectations that US President Donald Trump’s current round of import tariffs could trash the global economy are set to make borrowing cheaper, according to mortgage experts. MPowered Mortgages said it had cut rates by up to 0.21% following the “Liberation Day” tariff announcements.
The lender, which offers one-day turnaround on its home loans, said it had reduced rates on its full suite of fixed mortgage rates in response to a sharp fall in swap rates following President Trump’s tariff announcement. The rate cuts will be effective from 9am on Tuesday and mean two-year fixed rates now start at 4.05%, while three-year fixed rates now start at 4.04% and five-year fixed rates now start at 4.14%.
Stuart Cheetham, chief executive of MPowered Mortgages said other lenders could soon follow by cutting their rates. He said: “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.
“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. As always, borrowers should seek independent financial advice before deciding on a mortgage deal.”
A drop in swap rates means mortgage lenders can pass on cheaper borrowing to their customers, and mortgage advisers are predicting rates could be as low as 3%.
SONIA swaps which are used by lenders to set fixed rate mortgages were still falling on Monday having dipped last week.
Pete Mugleston, mortgage adviser and managing director at Online Mortgage Advisor told NewsPage rates could go down but borrowers may need to act fast: “With SONIA swaps continuing to slide, we’re getting closer to seeing 2- and 3-year fixed rates starting with a 3.
“If the current trends hold, it wouldn’t be surprising to see lenders break that barrier in the coming weeks. However, many are holding back, likely waiting for sustained swap rate stability before repricing aggressively. Lenders are cautious not to move too early and risk margin pressure if markets swing back. Once one makes the move, others will likely follow quickly, so borrowers should be ready to act fast when the tipping point arrives. We’re definitely edging into more exciting territory.”
Katy Eatenton, mortgage specialist at Lifetime Wealth Management commented: “Swaps are on the slide and then some. Given that fixed-rate mortgages are priced off swaps, it’s surely only a matter of time before the cuts from lenders start coming. Any ideas that the current uncertainty might be a flash in the pan are quickly subsiding and markets are betting on a rate cut at next month’s meeting of the Monetary Policy Committee. Trump has unleashed chaos but borrowers look set to benefit.”
Michelle Lawson, director at Lawson Financial, commented: “Though house prices fell in March according to the Halifax, lower interest rates resulting from the Trump tornado could be just the news borrowers in the UK have been waiting for to really ignite the mortgage market. Increased demand if rates come down will drive house prices back up.”
Riz Malik, independent financial adviser at R3 Wealth, commented: “We could see some really big cuts in fixed-rate mortgage pricing this week. With house prices dipping according to Halifax and millions set to remortgage, a rate cut could spark much needed momentum in a hesitant market. It will take a brave lender to make the first big move on rates, but once one does, others may quickly follow.”
Stephen Perkins, managing director at Yellow Brick Mortgages, said lenders were waiting for the dust to settle. “No doubt if swap rates remain at current lower levels or drop further it is only a matter of time before the fixed mortgage rates available follow suit, along with additional pressure on the Bank of England to reduce the base rate to assist with the economic fall out from the tariffs.”
Andrew Montlake, managing director at Coreco said: “Since Trump’s Tariffs were announced, we have seen swap rates fall across the board, which could mean that lenders can reprice their mortgage products downwards. We could well see mortgage rates starting with a 3 once more. Much depends on the length of time Trump holds his current position, and the erratic nature of decisions coming from Washington means that the market will remain capricious. Lenders may, therefore, be reluctant to move too quickly and adopt a wait-and-see approach.”
