Tariffs introduced by US President, Donald Trump, could be a "silver lining" for UK mortgage borrowers, AJ Bell has stated.

The investment platform said the impact of the tariffs could lead to the Bank of England (BoE) responding with cuts to the base rate.

As a result, AJ Bell said this would likely result in cuts to mortgage rates across the market.

It added that the market had initially been pricing in two interest rate cuts this year, ahead of the introduction of the tariffs, but a third base rate cut could see it stand at 3.75% by the end of the year.

It comes after the two-year swap rate dropped from 4% on 1 April to 3.7% at the end of last week, and the two-year gilt yield has also fell from 4.2% to 3.9% in the same period.

AJ Bell stated that the market may "see falling interest rates feeding into mortgage pricing before too long".

Head of investment analysis at AJ Bell, Laith Khalaf, said: "There’s clearly a high degree of uncertainty around whether current market dynamics will be sustained, not least because Trump has already shown some flexibility around tariffs in the short time he’s been in office and will likely be getting calls from wealthy backers who have seen billions of dollars wiped off their wealth in the last few days. He may well stay the course, but then again, if he adjusted his trade policy in the face of plummeting stock markets, it wouldn’t come as a total surprise.

“The BoE will be keenly aware the inflationary outlook isn’t entirely one-sided. Cheaper oil will push down on UK inflation, giving the BoE scope to cut rates without worrying about rising prices. Likewise cheaper goods flowing into the UK instead of the US could help dampen inflation. However, on the flip side of the coin, exchange rate movements could create inflationary headwinds."

However, AJ Bell stated that if the UK imposes its own tariffs on imported US goods, inflation could creep upwards, leading to markets potentially walking back on expected rate cuts.

Looking forward, AJ Bell said that while a cut to the base rate could support home buyers and mortgage holders, it is "too early" to speculate about what this might mean for the Chancellor’s next Budget announcement.

Khalef added: "As things stand tariffs are likely to knock the OBR and BoE’s economic growth forecasts off course. That may wipe out the fiscal headroom for the Chancellor, but it’s not a done deal because lower interest rates would bolster the Exchequer’s coffers.

"It’s also a very, very long way until October when we might expect the next fiscal event, by which point the global economic picture could be very different. It’s therefore way too early to speculate on what money the chancellor may or may not have to conjure up to balance the books at the next Budget."

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