How US Tariffs Could Influence UK Mortgage Rates in 2025

Wednesday 16 April, 2025

Why it’s important to understand how US tariffs may impact your mortgage decisions

The recent imposition of 10% tariffs on UK exports by the United States has introduced new complexities into the UK's economic landscape. Although the 10% tariff may be negotiated down, it has sent ripples through the financial markets world-wide. Market analysts and economists are closely monitoring these developments to assess their potential impact on mortgage rates in the coming year. Understanding these projections is an important factor for homeowners, particularly those with mortgages nearing the end of their fixed terms.

Economic Implications of US Tariffs on the UK

The introduction of US tariffs is anticipated to have significant economic implications for the United Kingdom, and this is expected to influence various sectors and financial decisions.

One of the primary concerns is the potential inflationary pressures these tariffs may create, as they could lead to higher costs for UK exporters, resulting in increased consumer prices across multiple industries. Rising inflation may necessitate adjustments to monetary policy, with the Bank of England closely monitoring developments to ensure financial stability.

Tariffs may also impact exchange rates, potentially causing a depreciation of the British pound against the US dollar. Such changes could make imports more expensive, further contributing to inflation and adding financial strain to businesses and consumers.

Additionally, trade disruptions caused by these tariffs are likely to affect business confidence and investment levels, raising concerns about the potential slowing of economic growth. It is worth noting that the International Monetary Fund has previously highlighted the risks associated with escalating trade tensions, underscoring the importance of mitigating their effects on the global and UK economies.

In response to these economic challenges, the Bank of England has already undertaken measures to support economic stability. A reduction in the base rate to 4.5% was implemented in February 2025, reflecting efforts to manage the adverse impacts of inflation and trade tensions.

Financial markets are forecasting further adjustments, with the possibility of the base rate declining to 4% by the end of 2025. Such measures aim to foster an environment conducive to borrowing and investment while addressing broader economic concerns.

It is essential to note that any financial decisions based on these developments should be made with careful consideration and professional advice from regulated financial advisers. Adopting a proactive and informed approach will help individuals and businesses navigate this complex economic landscape effectively.

Mortgage Lenders Start Reducing Mortgage Rates

As a direct result of the market instability triggered by new US tariffs, and growing expectations that the Bank of England may need to cut interest rates faster and further than previously anticipated, some lenders have moved swiftly to reduce mortgage rates, with Barclays among those now offering deals below 4%, signalling increased competition in the lending market and a potential window of opportunity for borrowers.

Considerations for Borrowers with Maturing Fixed-Rate or Tracker-Rate Mortgages

For homeowners whose mortgages are nearing the end of their terms, it is essential to engage in thorough and strategic planning to secure the most suitable outcomes for your financial position.

My Mortgage Deal Expires Soon

If your mortgage term is due to expire within the next month, you should act promptly by contacting your lender to explore the options available to you. Immediate engagement with your lender is important, as failure to take action could result in your mortgage transitioning to a standard variable rate, which often carries higher monthly repayments.

Additionally, seeking advice from a qualified and regulated mortgage broker, such as Lonsdale, can be highly beneficial. Our professionals are equipped to provide insights into competitive rates and products tailored to your individual financial circumstances, ensuring your decision is well-informed and appropriate.

My Mortgage Deal Expires Within 6 Months

For borrowers whose mortgage term is set to end within six months, maintaining awareness of interest rate trends and broader economic developments is crucial. This understanding will enable you to make informed decisions as your renewal date approaches.

Many lenders offer the option to lock in rates several months ahead of your current term's expiration, so it is prudent to investigate whether this aligns with your financial objectives and market conditions. However, it is essential to carefully assess the potential risks and benefits of early renewal to determine whether it is advantageous for your specific situation.

My Mortgage Deal Expires Next Year

If your fixed-rate mortgage has up to a year remaining, now is the time to focus on long-term planning. Begin by assessing your financial circumstances and researching the mortgage products that may be suitable when your term concludes. Establishing a relationship with a regulated mortgage adviser at this stage can facilitate a smoother transition and provide ongoing guidance.

Staying informed about changes in the economic and regulatory landscape is equally important. Keeping abreast of policy updates and market forecasts will enhance your ability to anticipate fluctuations in mortgage rates and respond appropriately.

Throughout this process, it is vital to rely on information from regulated professionals and comply with all relevant financial guidelines to ensure your actions are in line with the standards set forth by the Financial Conduct Authority (FCA). Being proactive and informed will help you navigate this transition successfully and safeguard your financial well-being.

Amy Kadir, Lonsdale Mortgage Broker, St Albans, Hertfordshire said:

“The implementation of US tariffs presents challenges for the UK economy, with potential implications for inflation, exchange rates, and economic growth. The Bank of England's proactive adjustments to the base rate aim to navigate these complexities. For homeowners with maturing fixed-rate mortgages, staying informed and seeking professional advice are crucial steps to ensure financial stability in a fluctuating market”.

Call our mortgage broking team in St Albans on 01727 845500 if you need personalised mortgage product advice for a new mortgage or a remortgage.

Please note: As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments. This article is for information only and does not constitute advice.

Sources: Bank of England, Forbes