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Trump and mortgages

Journalist: Frances Ivens, Telegraph

ended 07. November 2024

For Telegraph Money

While the market expects two bank rate cuts before the spring (including today) could inflationary policies from Trump mean the speed of cuts is slower than anticiapted?

Could this mean that rates stay higher for longer in to next year?

5 responses from the Newspage community

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Ben Perks
Managing Director at Orchard Financial Advisers
I can’t believe that anything Trump does will Make Mortgages Great Again, so it is likely to provide a little turbulence. Our economy is strengthening slowly, so I would hope our new-found robustness will make us less susceptible to the potential circus over in the US. Base rate reductions were always going to be cautious and gradual in 2025 and I don’t see this changing.
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Craig Fish
Director at Lodestone Mortgages
It's likely that the UK will only see one base rate cut this year, in November, and then no more until the New Year. Whilst Trump's policies may have an impact on inflation, attention should be focused on our shores and the Budget which itself was inflationary. Next year is likely to witness a slow-and-steady-wins-the-race approach, as inflation fluctuates around and above its 2% target. The Bank of England have a delicate balancing job on their hands.
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Kelsey Phillips
Head of Specialist Lending at Arose Finance
In the near-term, Trump’s election victory could support further upward pressure on UK mortgage rates. With the Bank of England’s penultimate monetary policy decision of the year on Thursday, US financial markets are buoyant post Republican victory. By contrast, yesterday EURUSD nosedived by 2% and the GBPUSD depreciated to 1.29 – a symptom of comparative growth and productivity trajectories. If Cable remains depreciated and import tariffs are imposed, the consequent inflationary pressures could ultimately support higher UK Gilt yields. In that environment, we could see marginally higher mortgage rates and the Bank of England cutting more cautiously than previously anticipated. All eyes are on Thursday's decision.
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Dariusz Karpowicz
Director at Albion Financial Advice
Trump's return is causing market optimism, though the outlook for mortgages remains complex. While investors are responding positively to his win, his proposed fiscal policies and tax cuts could complicate the path to lower borrowing costs. His previous presidency demonstrated a tendency towards expansionary fiscal policy, and with current US debt levels already elevated, additional spending could maintain inflationary pressures. This scenario might compel the Federal Reserve to maintain higher rates longer than current market expectations suggest, potentially delaying the anticipated mortgage rate reductions. Despite positive market sentiment towards his candidacy, prospective homeowners may need to adjust their expectations for rapid rate relief in the coming year.
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Justin Moy
Managing Director at EHF Mortgages
Any triggers for higher inflation will put the breaks on multiple base rate cuts, but it's unlikely we see any major reaction to Trump's tenure for a few months just yet. It's hugely important that we establish favourable relationships with our biggest trade partner, or all of the hard work from the last 12 months will unravel and rates will only increase. Our own government has already sent Swap rates higher and mortgage rates in the same direction following their big spending Budget, so we have the abilty to mess up own economy without help from across the pond.