Donald Trump: how will election 2024 win and return to president impact UK mortgages, inflation and economy?

• Donald Trump is on track to secure the US presidency again, sparking global market reactions
• UK stock markets saw a boost, but the pound weakened, affecting travel and imports
• Trump’s focus on a strong US economy and lower inflation could impact UK mortgage rates
• And the dollar’s rise against the pound may make American goods pricier for UK consumers
• Experts also warn of possible volatility as Trump’s administration reshapes global trade

Donald Trump is nearing victory in the US presidential election.

At the time of writing, his future leadership has not been confirmed, with a number of crucial swing states yet to declare their results.

But Trump appears on track to secure the 270 electoral college votes and return to the White House as 47th President of the United States in January 2025.

While America seems half the world away, Trump’s second premiership could have important knock-on effects for life here in the UK.

Trump's presidency could bring a mix of benefits and challenges for UK spenders, but just how will his sophomore run affect personal finances in the UK?

What effect will his Republican administration have on mortgage rates and other economic issues? Here is everything you need to know.

What are the immediate effects of Trump’s win?

In the immediate aftermath of his declaration of victory, European stock markets were up, and the US dollar grew stronger as traders responded to Trump's re-election.

In the UK, the FTSE 100 index, which tracks the biggest companies on the London Stock Exchange, rose by about 1.5%. This jump reflects that a Republican win offers some stability for the US economy, which is crucial globally.

But the pound dropped about 1% against the US dollar, bringing it to around $1.29. The dollar's rise makes it more expensive for Brits to buy American goods or travel to the US, as their pounds won’t go as far.

What will it mean for mortgage rates?

Experts caution that while markets are responding positively, it’s still too early to tell what Trump’s economic policies will mean worldwide. If his administration’s policies lead to further US growth, it could impact the cost of borrowing here in the UK.

A strong dollar could put upward pressure on interest rates, which may lead to higher mortgage rates, making monthly payments more expensive for UK homeowners.

While the impact isn’t set in stone - it will take time to see the actual effects of his presidency - Trump’s economic policies could be felt by those on variable-rate mortgages first, while fixed-rate mortgage holders may see higher rates when it’s time to renew.

Will American products become more expensive?

Trump’s economic policies, aimed at making the US dollar strong, could mean that UK imports from the US - like certain goods, technology and services - become more expensive.

With the pound already weaker against the dollar, UK consumers may see higher prices on American products, such as electronics, fashion brands and some foods.

Additionally, UK travellers going to the US will likely get less value for their money, making trips more costly.

While Trump’s campaign promised economic stability, the global economy is still sensitive to US policy changes, and volatility may increase as investors and businesses adjust to his new policies.

For UK spenders, economic swings in the US can lead to fluctuating costs in everyday goods and services, especially imports.

Financial uncertainty can also affect the value of the pound, which in turn impacts buying power for anything priced in foreign currencies.

What does Trump mean for inflation?

Trump ran partly on a campaign of steadying the US economy and putting an end to rampant inflation, and if his approach succeeds in reducing US inflation, it might have a ripple effect, influencing central banks worldwide, including the Bank of England.

With inflation in check in the US, central banks may see less need for rapid interest rate hikes. But if the US economy grows too quickly or if inflation control doesn’t go as planned, the Bank of England might need to increase UK interest rates to keep up with global trends.

For UK borrowers, this could mean higher interest on loans and mortgages, pushing up monthly payments for homeowners and making it costlier to borrow overall.

As Trump’s presidency unfolds, the effects on the UK economy could become clearer and more impactful. Are you concerned about rising mortgage rates or the cost of goods? Join the conversation in the comments section.