Brits warned mortgage misery to continue and Donald Trump could make it worse
As revealed last month in the Daily Express, Donald Trump‘s election has already raised the cost of the UK government’s borrowing.
Gilt yields rose in the days before and just after Trump’s November win in the UK and the US.
However, a trade war could raise inflation, which could force the Bank of England to increase rates again.
Lindsay James, an investment strategist at Quilter Investors, said that Donald Trump‘s announcement of imminent tariffs on Mexico and Canada has revealed his willingness to use tariffs as a high-stakes threat to achieve the political wins he desires.
“With Mexico agreeing to strengthen their border, in a similar deal to the one made by Sheinbaum’s predecessor, struck in 2019 with Trump 1.0 that similarly succeeded in nullifying the threat of tariffs, it is a repeat of the same performance.
“In Canada, the charade was even more pointless; a fentanyl ‘tsar’ announced as a token appointment in a country responsible for less than 1% of the fentanyl powder flowing into the US, giving Trump a political win at little cost to Canada.
James said the trade war with China was concerning, as China is responsible for 13.5% of US imports. “In China, the negative impact on exports is expected to be offset by higher levels of government stimulus although escalatory effects could yet prove more damaging.”
Holly Tomlinson, financial planner at Quilter, said that mortgage rates are now easing off.
“Ahead of the Bank of England’s decision, lenders were already making changes. Lenders have proactively reduced rates on various mortgage products in anticipation of the Bank of England’s decision. Now that the rate cut is in place, homeowners on variable or tracker mortgages should start noticing lower monthly payments too. We may see some lenders introduce more competitive fixed-rate deals in the coming weeks but typically most new deals have already priced in this week’s cut.”
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