What do Trump's tariffs mean for UK mortgage rates and private rents?

Donald Trump’s tariffs have upset global markets, put the US on the path for a trade war with China – and sparked fears over what they might mean for British businesses, as well as the impact on mortgages and rents.

The UK has been levied with a 10% tariff on all exports to the US as part of the American president’s ‘liberation day’ tariffs on countries across the globe.

While the UK got off relatively lightly compared to the 125% tit-for-tat tariff being pushed on China, Labour are considering whether to hit back with retaliatory tariffs of their own or push for a trade deal.

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Speaking at the Liaison Committee on Tuesday (8 April), Keir Starmer described the tariffs across the globe as “very challenging”.

“I’m very obviously very disappointed to see tariffs in place. I don’t think that they are good for our economy or for economies around the world,” the prime minister said.

Trump backtracked on his stance against countries paying higher rates, such as Vietnam, Canada and Mexico, on Wednesday, instead imposing a blanket 10% tariff on all countries except China and 90-day pause on ‘reciprocal tariffs’.

But the tariffs have created a great degree of uncertainty with stock markets around the world plunging and rallying in recent days in response to the evolving situation.

But we’ve asked experts for their thoughts on what the tariffs could mean for UK mortgages and private rents.

What do tariffs mean for mortgages?

While the cost of living crisis saw the Bank of England hike interest rates to counteract inflation, the current thinking is that tariffs could even speed up rate cuts.

The Bank of England is reportedly looking to cut base interest rates, which currently sit 4.5%, three times this year, rather than previously expected two.

That’s because the central bank wants to encourage spending – higher interest rates mean people are more likely to save cash rather than spend it or borrow it as they would face higher costs for the latter.

Jonathan Bone, head of mortgages at online mortgage broker Better.co.uk, said: “Over the past few years, the UK has experienced a lot of economic uncertainty, which we’ve seen impact mortgage holders, but now Trump’s tariffs have heightened that global economic uncertainty even further.

“This means we could see reactions such as accelerated interest rate cuts by the Bank of England. There are several reasons for this. The growing uncertainty imposed by the tariffs has created fears of a potential global recession. If this happens, the Bank of England may respond by lowering interest rates to make borrowing cheaper for businesses and consumers.”

“Essentially, the broader impact of the tariffs could mean the Bank of England faces a dilemma: keeping rates high to combat inflation or lowering them to support growth.”

Inflation rates will have a say in whether the Bank of England looks to cut interest rates too but tariffs and the state of global finances will also have an impact. 

Bone added that falling swap rates – the rate of interest that lenders pay to institutions in return for fixed funding – have already seen mortgage lenders lower their fixed-rate mortgages recently.

“We may even see these drop even further in the coming weeks,” said Bone.

“Lower interest rates may be a silver lining for mortgage holders or those looking to get on the property ladder, as it improves affordability and reduces monthly mortgage payments for those who have been pinching the pennies.

“It is therefore important that those who are remortgaging or looking to get on the property ladder speak with a broker or lender as soon as possible so they can potentially take advantage of lower interest rates in the coming months.”

What do tariffs mean for rents?

Renters across the UK are already paying record-high rents that are soaring far beyond wider inflation and wage growth.

The latest Office for National Statistics figures showed average UK monthly rents increased by 8.1% to £1,326 in the 12 months up to February.

Surging rents are largely driven by the demand for private rented housing across the UK with social housing declining over recent decades.

But the uncertainty over investments could have an impact on the amount of money renters end up paying.

Interest rates could have an impact on the amount of interest landlords pay on buy-to-let mortgages. The 2024 English Private Landlord Survey showed that almost 70% landlords pay a fixed rate of interest with 16% paying interest at a flexible rate while 15% pay a mix of the two.

If Trump’s tariffs see interest rates rise then landlords paying a flexible rate could pass the rise on to tenants. Some landlords could, theoretically, opt to pass on falling interest rate payments to their tenants, too, in the shape of lower rents. 

Generation Rent has also warned that landlords who see the value of investments decline in the stock market could be tempted to raise rents to recoup their losses.

Ben Twomey, chief executive of Generation Rent, said: “Everyone needs a safe affordable home. The fear for renters is  there’s nothing stopping landlords with shares in the global market from clicking their fingers and recouping their losses through sudden rent rises.

“That’s why we need the government to protect tenants from unaffordable rent hikes by introducing a limit on how much landlords can raise the rent.”

Bone told the Big Issue that tariffs pose a “more complex situation for private renters” than those on mortgages.

The imbalance of supply and demand in the private rented sector is likely to see tenants navigating a “perfect storm of rising rents and limited housing supply”, he said.

“While falling interest rates may ease mortgage costs for landlords, rising costs, regulatory charges, and inflationary pressures – which are likely to be exacerbated by the tariffs – have already driven many landlords out of the market,” added Bone. 

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