The Trump tariff drama is far from over, but the effects are already being felt around the world.
Share prices and stock markets are even more of a roller coaster than usual. In the USA pundits are predicting everything from a glowing resurgence to a return to the 1930s depression.
The rest of the world waits for the president’s next move. His attempts to make America great again have succeeded in igniting fears of a trade war and made exporters who trade with the US nervous.
But – whether his policies are all part of a masterplan or pure capriciousness – the financial markets are already finding ways to deal with their likely consequences.
They may be painful – but could they also mean some good news for some of us?
What is happening?
With UK cars and other manufactured goods now more expensive for US buyers, there is fear that a collapse in the export market could trigger a recession in the UK. With low growth and stubborn inflation already making things difficult for business and individuals alike, any downturn in exports could be enough to push the UK economy over the edge.
Recession – when economies shrink for two quarters in a row – costs us money in the short term and eats into our wealth for the long term. It can even cost jobs and livelihoods. Increased costs, as businesses try to replace export revenues could be followed by job losses.
But there could be a silver lining for mortgage borrowers.
Interest rates could fall
The threat of recession could mean interest rates fall, for two distinct reasons.
The first is that central banks around the world may choose to reduce interest rates to try to stimulate their economies and so fend off recession.
The second is that money markets appear to already be pricing in rate reductions. The technical side is best left to the financial experts, but there are clear signs of growing expectation that interest rates are falling on the Sterling Overnight Index Average (SONIA), a leading inter-bank lending rate. Since the tariffs were announced, SONIA swaps rates have been falling.
One of the functions of SONIA is that it helps forecast where interest rates will be in the future. Lenders use this to help determine fixed-rate mortgage pricing.
Financial markets are now pricing in greater chances of economic recession. As a result, interest rate cuts are now forecast to be cut faster than before.
What does this mean for mortgage rates?
Homeowners may already be starting to see mortgage rates fall in the aftermath of Donald Trump's tariff announcements.
There is now an expectation that the Bank of England will cut interest rates three more times in 2025. They are predicted to end the year at 3.75%, down from 4.5 % now.
The expectation is that fixed mortgage rates could now follow suit. If fixed rates fall, there could be a lifeline for those whose current fixed rates are coming to an expensive end – and the chance of savings for other home buyers.
Some mortgage providers have already started to cut their rates.
What should you do?
If we are heading into a time of financial upheavals, it makes sense to plan accordingly – and take advantage of the positives.
A call to us at Continuum could help you look at your plans and your financial security, and if you are in the market for a mortgage, help you find the most appropriate deal for you.
President Trump may cost us all money if his tariffs trigger a global recession. But if there is a way to save on your mortgage as a result, it makes sense to take full advantage.
Call us today to see if the latest from the White House could save you money on your house.
Stock market volatility deepens as Wall Street faces rollercoaster opening | The Independent
Stocks Are on One of the Wildest Rollercoaster Rides of the Last 25 Years
SONIA interest rate benchmark | Bank of England
How far interest rates are expected to fall in 2025 and what it means for mortgages
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Mortgage products or investment strategy, you should seek independent financial advice before embarking on any course of action.
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