Millions of UK borrowers could receive a boost this week as mortgage rates are set to fall in a glimmer of hope amid Donald Trump’s trade war.
Borrowing costs are forecast to drop faster than previously expected after the US president imposed drastic tariffs on trading partners last week.
And oil and gas prices have also fallen after Trump’s announcement sent shockwaves across the globe – which could lower petrol costs and household bills.
The president’s decision to impose a blanket 10 per cent levy on imports to the US – and rates of up to 50 per cent on some countries – sparked global market turmoil and saw stocks crash in London, Europe, Asia and on Wall Street.
Growth forecasts for the UK economy have been slashed and analysts now think it is more likely that the world could be plunged into a recession.
But in a silver lining amid the chaos, Trump’s tariffs are set to lower borrowing costs as policymakers move to cut rates to stimulate growth.
Personal finance analysts are predicting that mortgage rates will drop this week as markets now expect between three and four Bank of England base rate cuts this year, compared to previous forecasts of two to three.
Lenders use the base rate to set mortgage prices, meaning the cost of home loans will also come down.
President Trump announced new tariffs on April 2 in a ‘Make America Wealthy Again’ trade announcement
The news sent shockwaves around the globe, with stocks crashing in London, Europe, Asia and on Wall Street
Personal finance analysts are predicting that mortgage rates will drop this week
‘The money markets are expecting interest rates in the UK to fall faster than they’d previously predicted, as worries about growth eclipse inflation concerns,’ Sarah Coles, head of personal finance at Hargreaves Lansdown said.
‘It means swap rates have dropped, which should feed through into lower fixed rate mortgages in the coming days. These have already edged down since the start of 2025, and are likely to continue to do so.’
David Hollingworth of broker L&C Mortgages said: ‘The growing expectation of interest rates being cut more quickly than previously expected will feed through to mortgage rates.
‘Market expectation on future rate movement has a direct impact on the cost that lenders can fund their fixed rate mortgages.
‘Swap rates are a strong indicator of where fixed rates are headed and have already dropped substantially in light of concerns over the impact of tariffs.
‘That should see lenders able to cut their fixed rate deals and borrowers can expect to see that feed into rates in the coming days and weeks, assuming nothing else changes.
‘The market is so competitive that lenders will cut rates where they can and we should see a round of repricing to come.’
According to the latest data from Moneyfacts, the average two-year fixed residential mortgage rate is now 5.32 per cent, down from 5.33 per cent on Friday. The average five-year fixed residential mortgage rate has dipped to 5.17 per cent, down from 5.18 per cent at the end of last week.
Meanwhile, analysts at investment bank Goldman Sachs have cut oil price expectations.
In a note dated April 6, the Wall Street giant cut its 2026 average price forecast by $4 for Brent to $58 a barrel and WTI to $55. Lower oil prices should feed through to cheaper petrol prices for motorists.
And wholesale gas prices have also dropped amid warmer temperatures and expectations that a global trade war will lower demand. That should result in lower energy bills for UK households.
The benchmark Dutch front-month contract was down £1.50 to £29.65 per megawatt hour this morning. The British day-ahead contract 4.25p at 85.25p per therm.