Mortgage rates could fall amid tariffs turmoil

Mortgage rates could drop more quickly than expected this year due to concerns that President Donald Trump's tariffs could trigger a global recession. City investors now predict a 95% chance the Bank of England will cut its interest rate in May to counter an economic downturn, up from a previous 77%. Trump's tariffs have caused significant losses in global stock markets, leading to lower borrowing costs for mortgage lenders. As a result, swap rates have fallen sharply, signaling that investors believe tariffs will negatively impact UK economic growth. However, the Guardian reports that as spring brings increased activity to the housing market, buyers and those remortgaging are facing higher costs than in previous years. The average new mortgage rate now starts at 5%, and borrowers must also contend with significant arrangement fees, which have risen by £81 over the past five years to £1,121. Separately, the FT reports that around £320bn in residential and buy-to-let loans will need refinancing in 2025, primarily due to homeowners reaching the end of five-year fixed terms taken during the mid-pandemic housing boom. 

Financial Times (04/04/2025)   The Guardian (04/04/2025)   The Times (04/04/2025)