"borrowers should seek independent financial advice"
Some UK lenders are cutting mortgage rates amid expectations that interest rates could fall further in 2025.
The change follows economic uncertainty triggered by US President Donald Trump’s tariff policy.
TSB Bank said it would reduce selected two-year fixed mortgage rates by up to 0.25 percentage points from April 8.
MPowered Mortgages also cut rates on several deals earlier this week.
Stuart Cheetham, chief executive of MPowered Mortgages said:
“Since Trump announced the ‘Liberation Day’ tariffs we have seen a sharp fall in the swap rates which has enabled us to reduce our fixed rate mortgage rates.
“Whilst these tariffs could have a detrimental impact on the UK economy with increased prices putting extra strain on UK households, there is a silver lining for mortgage borrowers who will see rates come down over the coming week.
“As always, borrowers should seek independent financial advice before deciding on a mortgage deal.”
Financial markets now expect the Bank of England to lower interest rates more aggressively than previously predicted.
The Bank Rate is currently 4.5% and was forecast to fall twice in 2025. Analysts now expect three cuts before the end of the year.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said the Bank of England, and other countries’ central banks, “will be really looking to cut interest rates as much as possible in order to support growth”.
She added: “And of course mortgage companies start to price that in right away and we’ve already seen mortgage rates start to fall and we should see plenty of that in the coming days.”
Despite these developments, average mortgage rates remained unchanged.
Two-year fixed deals averaged 5.32% and five-year fixed rates stood at 5.17%, according to Moneyfacts. However, the company said rates could drop in the coming weeks.
Mortgage brokers said that some deals could fall to as low as 3.79%, depending on swap rates. Lenders use swap rates to help set fixed mortgage costs.
Laith Khalaf, head of investment analysis for AJ Bell, said:
“Trump’s tariff announcement might have created havoc in the stock market, but there could be a silver lining for UK mortgage borrowers.”
However, experts warned that not everyone will benefit.
The cheapest rates are often out of reach for first-time buyers and may come with high fees.
Many homeowners who fixed deals before mid-2021 will still face higher repayments as they remortgage.
According to the Bank of England, around a third of mortgage holders are due to refinance in the next two years.
Rachel Springall from Moneyfacts said: “Usually once a notable brand moves to cut mortgage rates, others follow suit.”
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