UK households face mortgage payments rising to £1,386 after Donald Trump US election win

Homeowners have been issued an urgent warning as mortgage rates are projected to climb to 4.5 per cent by 2027 in the wake of the Donald Trump election victory. It means somebody buying the average UK home - £292,000 - at 35 years faces a £1,386 repayment.

In its latest report, the National Institute of Economic and Social Research explained that the country could post economic growth of just 0.4 per cent next year if Trump implements the tariffs he promised, said Ahmet Kaya, principal economist at NIESR.

Kaya said: "Relative stability is under serious threat by the potential raising of import tariffs in the United States. The Bank of England would probably have to raise interest rates to counter a rise in prices caused by higher US tariffs but inflation would still probably rise by between two and three percentage points over two years.

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"That kind of increase in borrowing costs would deal a major blow to the plans of the new UK Government to use more borrowing in addition to tax rises to fund increased spending." Susannah Streeter, head of money and markets at Hargreaves Lansdown said: "Fresh nervousness has been sweeping financial markets after Donald Trump’s triumphant win.

"His policies look set to increase inflationary pressures and swell the US deficit even further, with knock-on effects expected for the UK economy." Streeter added: "Gilts often move in tandem with treasuries and this special relationship is playing out today, pushing up UK borrowing costs sharply.

"Concerns about the inflationary knock-on effect of the fresh wave of tariffs promised by Trump are seeping through the markets. There is also concern that his trade policies could hold back Britain’s economic growth. The fear of a stagflation scenario emerging in some economies appears once again to be stalking markets."

Danni Hewson, head of financial analysis at AJ Bell, said: “A Trump win could see tariffs push up inflation which is likely to make the Federal Reserve act slower to cut rates, thus strengthening the value of the dollar versus the pound. A weaker pound means inflation on imports, which could effect inflation in the UK and push the Bank of England to hold back on rate cutting, keep interest rates higher for longer.

“Ultimately, this could end up in a complicated game of central banker chicken but needless to say inflation and interest rates have a huge influence on Brits’ personal finances so it’s something many will be hyper aware of.”