Trump's Election Sends Gilt Yields Soaring, Raising Concerns About Mortgage Rates

Donald Trump's Election and the Potential Impact on Mortgage Rates

Following Donald Trump's victory in the US presidential election, concerns have emerged about a potential rise in mortgage rates. Experts attribute this concern to the anticipated impact of Trump's policies on inflation and the subsequent rise in yields.

Richard Carter, head of fixed interest at Quilter Cheviot, explains that Trump's policies on tax and immigration are expected to drive inflation. This, in turn, could lead to rising yields in the US and consequently, in the UK as well.

The rise in yields has already pushed UK long-term borrowing costs to a 27-year high. This increase in borrowing costs could also influence swap rates, which are used by mortgage lenders to determine fixed-rate mortgage offerings.

Furthermore, the UK government's increased borrowing may lead the Bank of England to hold off on further cuts to the base rate. This could further impact mortgage rates, making them less attractive to potential borrowers.

While the full impact of Trump's policies on mortgage rates remains uncertain, experts believe that a rise is likely. This could have significant implications for the housing market and the broader economy.