Mortgage Rates and Trump’s Tariffs: Are Rates About to Fall?

US President Donal Trump announced a round of new tariffs on things imported from around the world earlier this month.  

How do import tariffs work? 

Tariffs are a type of tax charged on goods imported from other countries. They’re usually worked out as a percentage of the item’s value. So, if something is worth £10, and has a 25% tariff, it would cost an extra £2.50 to import it.  

What tariffs have been introduced? 

Trump has introduced various tariffs to different countries around the globe. The UK faces the lowest possible tariff of 10%, whilst the EU has been given a 20% levy. Trump says tariffs on imported goods are intended to encourage investment in companies in the US. 

The new tariffs are expected to have an economic impact on the UK and across the world. Many economists believe the tariffs will push up prices on imported goods and pass on the additional cost to consumers. For some firms, it may mean they stop importing goods altogether, which could also drive up prices of existing product.  

Why are they impacting mortgage rates?  

Some mortgage brokers, however, believe the new tariffs could benefit the UK mortgage market. This is because they believe it may encourage the MPC to lower interest rates when they next meet on 8^th May.  

They’ve lowered rates once already this year – in February. Generally, people have been expecting the rate to lower again this year, although the progress has been gradual, in an attempt to control inflation in the UK.   

It’s suggested that the potential slowdown in the economy as a result of the tariffs may result in a further rate reduction. 

What will happen next? 

There’s still lots of uncertainty about exactly what the tariffs mean for the UK. Some believe a further cut is now needed to bolster the UK economy. Others still think the lowering of rates will happen more gradually across 2025 and into 2026, and that the tariffs have added uncertainty to the state of UK finances.  

We don’t know for sure, so if you do have a mortgage, or are looking to get one, it makes sense to stay informed. And whatever happens with interest rates, we’ll keep you updated. Make sure to stay tuned to our latest news section, where we tuck into all the latest market news, from interest rates to house prices.