As expected, President Trump has rocked the global economy by delivering his promise of increasing import tariffs over a dozen key trade partners, including the UK. Global trade will slow because of this, and in order to stimulate the economy, the Bank of England is expected to cut base interest rates sooner and more aggressively.
Some mortgage lenders are already cutting their own rates to sub 4%, but does this mean you should jump on this opportunity and buy your house sooner rather than later? Dave Sayce, co-founder and Managing Director of Compare My Move, comments on whether or not you should buy your house now, or hold off.
“A sub-4% fixed mortgage rate may seem very appealing, particularly for those currently house hunting. On the surface, it can feel like the stars have aligned, encouraging buyers to lock in a deal as quickly as possible.
However, it’s important to recognise that we are still in the early stages of what appears to be a broader global economic downturn. Interest rates, employment trends, and international economic relations remain highly volatile.
At present, only a handful of lenders are offering these lower-rate mortgages. The larger institutions (Nationwide, Lloyds, Halifax, NatWest, HSBC, and Santander) have not yet released updated rates. These major lenders are likely holding off until there’s greater certainty around the economic outlook. But once they begin to adjust, we can expect them to cut rates in response. Historically, when the ‘big six’ make a move, other lenders tend to follow suit.
It may be worth waiting until one of the major lenders introduces rate cuts. However, even then, it’s important to consider your own circumstances, as your personal situation could be impacted by factors beyond just the base rate.
The first question you should ask yourself is: How will your industry be affected by Trump’s tariffs? If you rely on your job to pay your mortgage, understanding the potential impact on your sector is essential.
A baseline tariff of 10% is being introduced on most UK exports to the U.S. However, certain industries face significantly steeper penalties, notably cars, steel, and aluminium, which will be subject to 25% tariffs. Manufacturers operating in these sectors are likely to face heightened uncertainty in the months ahead.
If your role is directly tied to these industries, or even closely connected to their supply chains, it may be wise to pause any major financial commitments until there is greater economic clarity.
Another important question to consider is: Would a 1%–1.5% increase in your mortgage rate affect your decision to buy?
While mortgage rates are widely expected to fall, we are still in a period of economic uncertainty. There’s always the possibility that rates could rise again by the time your fixed term ends.
If a future increase in mortgage rates would make your purchase unaffordable or cause you to reconsider buying altogether, it may be wiser to hold off. Waiting until you’re in a more financially secure position could be a better long-term decision, rather than rushing to secure a lower rate simply because it’s available now.”
First Time Buyer is an exciting bi-monthly glossy which takes a stylish and comprehensive look at all the options available, setting them out in an entertaining and informative way, and helping potential customers navigate their way through what is often a daunting and complex process. We dispel the myths, reinforce the facts and arm the reader with the tools necessary to make their homeownership dreams a reality.
