The ongoing global economic shifts, including the continued ripple effects of US President Donald Trump’s tariffs, are set to drive down mortgage rates in the UK. As these tariffs disrupt global supply chains, financial markets are increasingly pricing in a potential economic slowdown, with interest rate cuts now expected to occur at a faster pace than previously anticipated.
Recent movements in financial markets indicate a growing consensus among economists that the Bank of England is likely to implement further interest rate cuts in 2025. Predictions suggest that the benchmark rate could fall to 3.75% by the end of the year, down from its current level of 4.5%. In line with this forecast, Sonia swaps—inter-bank lending rates that offer insight into the direction of future mortgage rates—have dropped considerably. Five-year swaps are currently at 3.63%, and two-year swaps are at 3.66%, down from 3.97% and 4.02% respectively just a week ago, following Trump’s tariff announcement.
For property investors, developers, and landlords, these developments present a potential opportunity. If swap rates remain at these lower levels, fixed-rate mortgage deals are expected to decrease in the near future, potentially leading to more favorable borrowing conditions. This shift in rates is particularly relevant for those looking to finance property acquisitions or refinance existing portfolios.
MPowered Mortgages has already responded to the dip in swap rates by reducing its fixed-rate mortgage offerings across a range of products. Effective from today, the lender is offering the following reduced rates for new purchase customers:
- Two-year fixed rates: Starting at 4.05% at 60% LTV with a £999 fee, or 4.29% with no fee.
- Three-year fixed rates: Starting at 4.04% at 60% LTV with a £999 fee, or 4.15% with no fee.
- Five-year fixed rates: Starting at 4.14% at 60% LTV with a £999 fee, or 4.28% with no fee.
Stuart Cheetham, CEO of MPowered Mortgages, commented, “The sharp fall in swap rates following President Trump’s tariff announcement has allowed us to reduce our fixed-rate mortgage products. While these tariffs may pose challenges for the broader UK economy by driving up prices, there is a silver lining for property borrowers, as lower mortgage rates will be available in the coming weeks. As always, we encourage borrowers to seek independent financial advice to ensure the right decision for their circumstances.”
For property professionals, this environment presents a favorable opportunity to lock in lower borrowing costs, particularly for those considering long-term investments or refinancing. With mortgage rates on the decline, now may be an opportune time to assess your property financing strategy, whether for acquiring new assets or optimizing the terms of existing loans.
