Hello readers,
What a past few days it’s been for the global economy with Trump levying tariffs on practically every inhabited and uninhabited country in the world! I have been spending some time looking at the potential impact of these tariffs on the UK property market and thought I’d share my findings with you.
I have spotted some headlines that appear almost too strange to be true: The FT published an article headlined with “Trump tariffs may ‘single-handedly’ rescue UK housing market“. Sounds like a bad April Fools’ joke, right? How could Donald Trump’s new tariffs help the UK housing market?
On Trump’s so-called “Liberation Day,” markets immediately reacted, with mortgage swap rates falling, and increasing predictions from market analysts foreseeing drops in interest rates.
Why are tariffs affecting mortgage rates?
It all comes down to uncertainty. Trump’s tariffs rattled the global economy. Investors hate unpredictability so, in response, traders started betting that the UK economy will take a hit from the fallout. And when that happens? Rate cuts often follow (I have read how we might possibly even expect the Bank of England base rate to be 3.75% instead of 4% by the end of the year with three drops between now and December).
Since tariffs came in, swap rates which are used by lenders to price fixed-rate mortgages have dropped across the board. This opens the door for lenders to potentially offer lower mortgage deals. And that’s the part grabbing the headlines. Check out the graph below:
Lower mortgage rates equals market recovery? Not quite.
The idea is that cheaper mortgages mean more buyers, more activity, and possibly some breathing room for landlords refinancing or first-time buyers struggling with affordability. However, just because swap rates have fallen it doesn’t mean that lenders will pass those savings on immediately, or at all.
In fact, the day after the tariffs announcement, NatWest and Virgin Money actually increased some of their rates. These rate changes take time to feed through, and those decisions were probably made before the tariff news hit the airwaves.
Imported inflation and rising construction costs
Here’s the double whammy- while borrowing might get cheaper, building could get more expensive. We import a lot of building materials steel, timber, white goods, even kitchen fittings. If the pound weakens or global trade gets choppier, those costs go up.
For developers, that’s bad news: tighter margins, fewer new builds (so much for Labour’s ambitious housing target), or higher asking prices.
For renters? There could be knock-on effects:
- Fewer new rental homes = tighter supply
- Leasehold service charges might rise as maintenance costs go up
- Renovations and refurbs could get pricier
If you’re a landlord looking to upgrade or expand your portfolio, it’s worth factoring these pressures into your long-term budgeting.
A market in tug-of-war: confidence vs. cost
Let’s not forget the emotional side of the property market: buyer and tenant confidence.
Wage growth might finally be outpacing house prices for the first time since 2019, but that doesn’t mean many people aren’t struggling with the cost of housing.
I looked at ONS data, which highlights how homes still cost around 7.7 times the average full-time salary, down from the 2021 high of 9 times earnings but hardly a bargain, especially when compared against historical levels. Also, as mortgages tend to only lend at around five times salary, for many owning a house could be out of reach.
So while some of the data suggests things are easing, the needle still has a long way to go to fill the gap.
With the wider mood being shaped by economic uncertainty; tariffs, trade wars, and that constant feeling of “what now?”, confidence tends to take a back seat no matter what the spreadsheets say.
This means that we could see:
- First-time buyers waiting it out for better mortgage deals
- Homeowners delaying moving until rates stabilise
- Tenants sticking put longer to avoid unpredictable costs
But there’s also an opportunity. If fixed-rate mortgage deals do improve, and developers adjust to costs, we might see a subtle but positive shift in affordability, especially outside of the overheated hotspots.
What should landlords and buyers watch out for?
My advice is to stay informed but don’t panic.
This isn’t a housing crash, it’s more like a speed bump and how bumpy it gets depends on how lenders, international banking, the Bank of England, and global trade players react next.
Here’s what to keep your eye on:
- Mortgage rates vs. BoE cuts – Will lenders pass on the savings or hold back?
- Material costs and supply chain issues – Will refurb projects suddenly get more expensive?
- Rental yields – With affordability easing slightly, will rental demand soften, stay strong, or shift?
As always, knowledge is your best defence. Keep your eyes open, your spreadsheets updated, and your strategy flexible.
Need help navigating what this could mean for your property plans? Send me your thoughts about this article or what’s happening in the world at hasan@home-share.co.uk, I would love to hear what my readers are thinking about recent events!
Hasan
