It's the silver lining that few saw coming…
In the wake of Donald Trump's extraordinary global tariffs, a mortgage war appears to be brewing – and it could be good news for brokers and their customers.
Lenders are beginning to rapidly reprice and fine tune their criteria to give them a competitive edge, in what seems to be an unexpected silver lining to the President’s game-changing announcement a week ago. Among them are TSB, The Mortgage Works (TMW), Pepper Money, Gen H and Clydesdale Bank.
Given that Trump’s theatrically-delivered announcement was greeted with huge alarm and a mood of despondency about the global economy, this development is somewhat surprising. So, should brokers be popping open the champagne in anticipation of a golden spring and summer, or is there need for a little caution?
“In my opinion, what we are seeing now is one of those rare instances where global disruption offers a glimmer of opportunity, at least in the short term, for mortgage brokers and their clients,” declared Nicholas Mendes (pictured left), head of marketing at London broker, John Charcol. “The chaos sparked by Trump’s tariffs has, paradoxically, brought about a situation where swap rates are falling, and brokers may find themselves in an unexpectedly advantageous position. The sharp fall in swap rates, triggered by investor flight from risk, should create immediate downward pressure on mortgage pricing.”
Mendes finds it hard to imagine that other lenders won’t follow. “For brokers, this creates an environment that is not just more competitive but also more dynamic,” he reasoned. “The next few days and the week ahead will be telling. A tariff war, especially one as unpredictable as this, is inherently damaging. Markets are skittish, inflation expectations are in flux, and the political situation in the United States is nothing short of volatile. Stability feels like a luxury we simply do not have.
“One-year swaps falling below 4% is something we have not seen in quite some time, and the odds of further reductions this year are rising. Markets are already pricing that in, but so far, apart from a couple of lenders, we have not seen widespread repricing across the board. Assuming we stay on the current trajectory, this opens the door to more affordable finance for buyers, and perhaps a bit of relief for homeowners looking to remortgage. So, while I would not go so far as to call this a win, given the very real wider economic risks, it is certainly a time where brokers continue to show their value in the advice space.”
Mortgage adviser Joela Jenvey (pictured second from left), of Nurture FS, suggests the recent downward pricing trend from mortgage providers has been driven by a mix of global uncertainty and shifting funding costs. “As the impact of Trump’s tariffs spreads, it’s led to lower global bond yields, which in turn has reduced the cost of borrowing for UK lenders,” Jenvey said. “This has given lenders the flexibility to offer more competitive rates to maintain their market share and acquisition targets for 2025 completions. More product and lender choice is enabling brokers, when researching the market, to really offer quality bespoke advice and also allowing us to focus on the client’s best outcomes pre- and post-offer with rate switches. The way lenders fund themselves also plays a role here. For example, those that rely on swap rates can benefit from the drop in global yields, allowing them to price mortgages more competitively. Lenders that depend more on retail deposits for funding may not feel the same immediate impact, but they still need to stay competitive in a low-rate environment.”
Like everything in finance, it’s important to stay aware of the bigger picture, notes Jenvey. “We need to be ready to adapt,” she said. “It’s a bit like playing a game of whack-a-mole. When one challenge is addressed, another one often follows, but this time, the fallout from Trump’s tariffs is actually creating opportunities in our favour. It’s a reminder that while we can’t always predict the impact of these policies, sometimes, even the unforeseen consequences can work out in our favour - for now, at least.”
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In Ben Perks’ view, the ‘ever-resilient’ UK mortgage market seems to have dodged a bullet. The managing director of Orchard Financial Advisers, predicts that two year-fixed borrowing could soon be available at sub-4%. “This is something of a milestone for interest rates,” commented Perks (pictured centre). “We should see the competition heating up, along with the weather, this spring. This is all very encouraging, but the global economy is volatile. Brokers and borrowers will have to act fast to secure rates in case this is a flash in the pan moment. Whilst the trajectory of rates over the last two years has been downward, we have seen several little rises and falls along the way. It’s been a bumpy old road to recovery.” He added: “All eyes now turn to the Bank of England’s Monetary Policy Committee who will be facing a huge amount of pressure to reduce the base rate in May. If they can summon the courage to cut, they have the ability to provide certainty and stability, which will fill borrowers with confidence. Confident borrowers and better rates - what a lovely mix.”
The uncertainty rocking the financial markets at the moment means that it’s anybody’s guess as to what may come next, according to David Hollingworth (pictured second from right), associate director at L&C Mortgages. “The fact that markets seem to expect that interest rates will fall a little more quickly than previously expected should give lenders some leeway to review their pricing,” Hollingworth said. “Fixed rates could come down further and there are some signs of that so far, although it’s failed to set new lows in the market. However, I’d expect that the level of lender competition will likely see some more moves to come and once one lender shows its hand others can follow quickly. Of course, the backdrop and sentiment can still change very quickly so things could shift rapidly, depending on how things develop.” He added: “Although I’d hope that there will be a broadening range of more competitive rates on offer, any hopes that this is a signal that rates will keep on diving look premature as things stand - but there’s bound to be more volatility to come as the story unfolds.”
Meanwhile, Amar Dhanota (pictured ), specialist mortgage adviser at London F-S, is cautious about laying all of the market movement at Trump’s door. “I think global economic uncertainty does influence interest rates, however recent activity is more due to the pressures and opportunities within the domestic UK housing market,” Dhanota said. “It is positive as this is helping to provide clients better deals, more tailored products, and potentially lower rates. So, while I'm hesitant to attribute this competitive climate directly to Trump's tariffs or global politics alone, I can confidently say that the ‘mortgage war' in the UK is good news for borrowers - and certainly keeps us brokers on our toes.”
