(qlmbusinessnews.com . Fri 11th Apr, 2025) London, UK —
Falling US Tariffs Spur UK Mortgage Rate Cuts – What This Means for Homeowners
A growing number of UK mortgage lenders have slashed their rates in response to the fallout from US tariffs, which have fueled expectations of more aggressive interest rate cuts by the Bank of England. Coventry Building Society, for example, has become the largest mortgage provider to reduce its two-year fixed rate deal to below 4%, setting a new benchmark among lenders.
Financial markets and economists are increasingly predicting that the Bank of England may lower borrowing costs more than previously anticipated in a bid to stave off an economic downturn. This shift comes amid heightened global economic instability following President Donald Trump’s aggressive tariff measures on US imports from over 60 countries.
According to data from Moneyfacts, the average two-year fixed mortgage rate has ticked down to 5.3%, while the average five-year fixed rate has dropped to 5.15%. Specifically, Coventry Building Society’s new two-year fixed rate deal is now at 3.89% until October 2027. Jonathan Stinton, Head of Mortgage Relations at Coventry, explained that there is a “growing demand for shorter-term flexibility in an uncertain market.” However, this product is available only for borrowers with a 65% loan-to-value ratio and comes with a £999 fee.
Other lenders, including Clydesdale Bank and Newcastle Building Society, have also announced rate cuts, while the Co-operative Bank is set to reduce its fixed rates on certain purchase mortgages by 0.14 percentage points. TSB, Metro, and Bank of Ireland have similarly made adjustments since the start of this week.
Despite these recent reductions, many mortgage holders who are coming off fixed deals—particularly those that were secured before interest rates began rising in mid-2021—are likely to face higher costs when they refinance. Figures from the Financial Conduct Authority indicate that around 1.3 million homeowners will see their current fixed-rate deals expire between April and December this year.
Brokers anticipate further rate cuts in the coming days, as the “Big Six” lenders—Halifax, Nationwide, HSBC, Santander, Lloyds, and Natwest—have so far adopted a “wait and see” approach, with many expecting that once one lender cuts rates, others will follow.
Economists note that central banks usually respond to economic downturns by cutting interest rates to stimulate borrowing and spending, a move that has already been supported by a consensus among experts predicting up to four Bank of England rate cuts in the next 12 months—a significant increase from the initial forecast of just two. A Nationwide spokesperson told reporters, “We keep our fixed mortgage rates under regular review, and we have already made a number of rate cuts over the last couple of months.” Rachel Springall from Moneyfacts added that it typically takes a couple of weeks for lenders to adjust to volatility in the swap market.
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