Mortgage rates to stay higher for longer amid high inflation
The announcement is a significant revision from the Office for Budget Responsibility's (OBR) earlier forecast of 2.6%, and it has raised concerns that interest rates will now decrease more slowly.
The average rate for a two-year fixed mortgage stands at 5.19%, while five-year fixed deals average 5.31%, according to data from Uswitch.
The Bank of England held its interest rate at 4.5% this month, after warning that global economic uncertainty has "intensified".
This is the lowest level for rates in more than 18 months, following a reduction from 4.75% in February — the third such cut since August 2024.
The main inflation measure, the Consumer Price Index (CPI), stood at 2.8% in the 12 months to February 2025, a slight decrease from the previous month. While this marks a significant drop from the peak of 11.1% seen in October 2022, it remains well above the Bank of England's target of 2%.
Justin Moy, managing director at EHF Mortgages, told The i Paper: 'Those looking for a quick cut to mortgage rates will be disappointed by Wednesday's statement. With no additional support for homeowners, the mantra 'higher for longer' will rattle mortgage borrowers for the next few years.
'Confidence and stability still need to be proven by the government, the economy has a number of tax rises to swallow and if growth goes into reverse, that would be the trigger for deeper cuts to rates. But in the meantime, there isn't a lot of cheer for mortgage holders.'
Read more: Key takeaways from Rachel Reeves' spring statement
Critics were quick to respond, including shadow chancellor Mel Stride, who said: "Inflation, which was down to 2% bang on target on the very day of the last general election under a Conservative government. We are now told this year we'll be running at twice the level of the forecast under ourselves in 2024. This is going to mean prices bearing down on households and on businesses, right across the country, because of her choices."
The spring statement also provided little relief for the housing market, with no new measures introduced to support buyers. There was no extension of the stamp duty concession, which is set to expire this week, and no new mortgage schemes for first-time buyers.
Mark Harris, chief executive of mortgage broker SPF Private Clients: 'The spring statement was underwhelming as far as the housing market is concerned.
'The chancellor missed an opportunity to boost all-important transactions by extending the stamp duty concession or introducing some discount for downsizers.
"She also did nothing for first-time buyers, with no incentives or assistance to get them on the housing ladder — a significant shame as first-time buyers are the lifeblood of the market and enable existing homeowners to move up the ladder."
Read more: UK house price growth slows ahead of stamp duty changes
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: 'Our first wish was granted — the chancellor didn't do much, if anything, to deter existing activity in the housing market.
'It also seems a little unfair on those who have moved heaven and earth to take advantage of the stamp duty concession before it disappears but who may not make it, through no fault of their own. The deadline could perhaps have been extended for those transactions in solicitors' hands from the beginning of February as a small respite.
"Looking forward, a broader review into the impact of stamp duty on the market and making it less of a deterrent, particularly at the first-time buyer end, would have been welcome.'
This week, there were no major cuts to rates as lenders took a wait and see approach amid the spring statement.
HSBC (HSBA.L) has a 4.07% rate for a five-year deal. This is unchanged from the previous week. For those who have a Premier Standard account with the lender, this rate comes in at 3.98%.
Looking at the two-year options, the lowest rate stands at 4.12% with a £999 fee, again unchanged from the previous week.
Both cases assume a 60% loan-to-value (LTV) mortgage, meaning buyers need to have at least 40% for a deposit.
HSBC offers 95% LTV deals, meaning you only need to save for a 5% deposit. The rates are much higher, however, with a two-year fix coming in at 5.39% or 5.08% for a five-year fix.
This is because the rate someone can get will be determined by their financial situation and the size of their deposit. The larger the deposit, the lower the LTV, allowing buyers to access better deals because lenders consider them less risky.
NatWest (NWG.L) has a five-year deal coming in at 4.12% with a £1,495 fee, which is unchanged from the previous week.
For a two-year fix, the cheapest deal comes in at 4.15%, also unchanged. In both cases, you'll need at least a 40% deposit to qualify for the rates.
At Santander (BNC.L), a five-year fix comes in at 4.10%, unchanged from the previous week, with a £999 fee, assuming you have a 40% deposit.
For a two-year deal, customers can also secure a 4.15% offer, with the same £999 fee, which is also untouched.
Read more: How to protect over £370,000 in savings from tax
In addition to maintaining its current rate offerings, Santander has expanded its product range to support first-time buyers. The bank has introduced new fixed-rate deals for first-time buyers with loan-to-value (LTV) ratios ranging from 60% to 95%. These include options for two-, three-,five- and 10-year terms, as well as a two-year tracker mortgage. Notably, these new deals come with flexible product fees — either £999 or £0 — depending on the option chosen.
Santander has also introduced new mortgage products tailored to first-time buyers with large loans, featuring two- and five-year fixed-rate deals at 60% LTV, albeit with a higher £1,999 product fee.
Additionally, the bank is catering to first-time buyers purchasing new-build properties with the launch of new range of 60% to 95% LTV three-year fixed deals. Options available with a £999 or £0 product fee.
A five-year fix at Barclays (BARC.L) comes in at 4.06%, which is untouched from the previous week. For "premier" clients this rate drops to 3.99%.
When it comes to two-year mortgage deals, the lowest you can get is 4.11%, also unchanged from last week's deal.
Barclays has also launched a new mortgage proposition designed to help new and existing customers access larger loans when purchasing a home. The initiative, known as Mortgage Boost, enables family members or friends to effectively "boost" the amount that can be borrowed towards a property, without needing to lend or gift money directly or provide a larger deposit.
Read more: Best credit card deals of the week
Under the new scheme, a borrower's eligibility for a mortgage can increase significantly by including a family member or friend on the application. For example, an individual with a £37,500 annual income and a £30,000 deposit might traditionally be able to borrow up to £168,375, enabling them to purchase a home priced at around £198,375.
However, with Mortgage Boost, if a second person — such as a parent — joins the application, the total borrowing potential can rise substantially. In this case, if the second applicant also earns £37,500 a year, the combined income could push the borrowing limit to £270,000, enabling the buyer to afford a home worth up to £300,000.
Nationwide (NBS.L) is offering a five-year fix at 4.34%, which comes with a £999 fee and requires a 40% deposit. This is unchanged from last week.
Nationwide offers a two-year fixed rate for home purchase at 4.34% with a £999 fee — also for borrowers with a 40% deposit. Again, unchanged from the previous week.
Halifax, the UK's biggest mortgage lender, offers a five-year rate for 4.17% (also 60% LTV), which is higher than last week's 4.12%.
The lender, owned by Lloyds (LLOY.L), has a two-year fixed rate deal coming in at 4.06%, with a £999 fee for first-time buyers, which is lower than the previous 4.15%.
Read more: How to negotiate house prices
It also offers a 10-year deal with a mortgage rate of 4.78%.
The lender has announced the launch of a new 1.5-year fixed-rate remortgage product in response to growing demand among borrowers for shorter-term deals.
Shorter-term fixes offer certainty over monthly payments while also allowing households to switch to a new deal sooner to capitalise on lower rates.
With sub-4% mortgages basically off the market unless you're a premium client, prospective homeowners do not have a lot of reasons to smile when it comes to finding a good deal.
Barclays currently has the cheapest deal on the market for a five-year fix, and Halifax has the cheapest for a two-year deal, both at 4.06%. However, they both require a 40% deposit, so you will need a hefty amount of cash upfront to secure the deal.
Given the average UK house price sits at £366,189, a 40% deposit equates to about £147,000.
A growing number of homeowners in the UK are opting for 35-year or longer mortgage terms, with a significant rise in older borrowers stretching their repayment periods well into their 70s.
Read more: UK house prices climb £10,431 amid demand for bigger homes
Lender April Mortgages is offering buyers the chance to borrow up to six times their income on loans fixed for five to 15 years, from a deposit of 5%. Both those buying alone and those buying with others can apply for the mortgage.
The company, which is part of an independent Dutch asset manager DMFCO, has interest rates starting at 5.20%, with an application fee of £195.
Skipton Building Society has also said it would allow first-time buyers to borrow up to 5.5 times their income, in an effort to support more borrowers on to the housing ladder.
Leeds Building Society is increasing the maximum amount that first-time buyers can potentially borrow as a multiple of their earnings, with the launch of a new mortgage range. Aspiring homeowners with a minimum household income of £40,000 may now be able to borrow up to 5.5 times their earnings.
Mortgage holders and borrowers have faced record-high repayments in recent years, as the Bank of England's base rate has been passed on by banks and building societies.
With 1.8 million fixed mortgage deals set to end in 2025, according to UK Finance, many homeowners will be hoping the Bank of England acts quickly to cut rates more aggressively. At the same time, savers will likely be rooting for rates to remain at or near their current levels.
Read more:
10 home upgrades that don't need planning permission
What are green mortgages and are they the future?
How rising house prices can impact your finances
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
Voices: There won't be a wealth tax – but Rachel Reeves can't afford to rule it out just yet
Normally, when politicians decline to rule something out, a sceptical media and public believe they are about to do it. But there should be one exception to this rule. Keir Starmer, Rachel Reeves and other ministers are refusing to rule out introducing a wealth tax in this autumn's Budget, when the chancellor is likely to raise taxes by at least £20bn to stick within her fiscal rules. I'm told Starmer and Reeves will not bring in a new wealth tax, such as the 2 per cent levy on assets of more than £10m advocated by a growing number of Labour MPs and Neil Kinnock, the party's former leader, to raise £10bn. A wealth tax is an easy slogan and fits on to a banner. It would do nicely for the Starmer allies hoping to nudge him in a more progressive direction as he seeks a long overdue 'story' for his government. But Reeves and Starmer are not convinced. The chancellor thinks wealth taxes don't work. Twelve developed nations had them in 1990s but only three remain; only one, in Switzerland, brings in lots of money. Reeves burnt her own fingers by targeting non-doms – a process begun by Jeremy Hunt, the outgoing Tory chancellor. I'm told Reeves privately dismissed fears the rich would respond by leaving the UK, saying: "They always say that, but it never happens." It is happening, and she is now considering changing her plan to make worldwide assets, including those in foreign trusts, liable to inheritance tax. One government insider told me: 'People can choose where to pay their taxes. It's very easy to move countries and they are doing it.' A new wealth tax would be complex, take years to introduce and probably not be worth the candle. Dan Neidle, founder of Tax Policy Associates, said its study found such a tax would 'lower long-run growth and employment, thanks to a decline in foreign and domestic investment. It would make UK businesses more fragile and less competitive, and create strong incentives for capital reallocation and migration.' Why not just say no to a wealth tax now? Reeves offered one explanation to her Tory predecessor Norman Lamont at a Lords committee hearing this week. He told her he found it 'a bit strange' the government has not ruled out the move. Reeves replied that if she ruled out one tax rise, the media would move on to the next option, and assume that one was going to happen if she failed to rule it out. A fair point – but not her only reason. Reeves and Starmer need to build bridges with the parliamentary Labour Party after it filleted their welfare legislation, so rejecting a wealth tax now would inflame tensions. I suspect that when the Budget comes, Reeves and her allies will whisper to Labour MPs they are introducing a form of wealth tax through other measures, while avoiding headlines about implementing a specific one. Another reason not to rule out a wealth tax is to help message discipline. Labour certainly needs more of that: ministers unwittingly fuelled speculation about tax rises in media interviews by giving different definitions of "working people'. Far easier to say taxes are a matter for the Budget and we don't comment in advance. Some senior Labour figures think Reeves's reticence is because she is considering proposals that are close to being a wealth tax – for example, increasing property-based taxes. I think she should bring in higher council tax bands for the most expensive properties. It's ludicrous that this tax is based on 1991 property values, and that in England, people in homes valued at more than £320,000 pay the same amount in their local authority. Reform could be sold as a genuine levelling up measure the Tories flunked as it would cut bills in the north and Midlands while raising them in the south. Alternatively, Reeves could increase capital gains tax for the second Budget running, perhaps by bringing it into line with income tax rates, which are higher. Some in government favour a rise in income tax with the money earmarked for defence, as I have suggested. Another option is to raise the top rate of income tax from 45 per cent to 50 per cent. But both ideas would leave Labour open to the charge of breaching its manifesto pledge not to increase income tax, national insurance or VAT. Reeves could argue that circumstances had changed in a more dangerous world. But breaking its promise might be a step too far for an already deeply unpopular PM and party. I don't think there will be a wealth tax. However, the rich shouldn't celebrate. The Budget will increase existing taxes on the wealthy, in line with the government's mantra of protecting "working people", while ensuring 'those with the broadest shoulders carry the greatest burden'. Health warning: creating losers is not pain-free for them or the government, as Reeves discovered when she brought in the 'family farms tax'. But reforming some taxes under a better banner – 'fair tax' – is her best shot.
Yahoo
2 hours ago
- Yahoo
What to expect in the Budget 2025
Anaemic growth and higher-than-expected government borrowing will be weighing on Rachel Reeves as MPs head off on their six-week summer recess. The Chancellor will not be able to avoid questions about how she's going to address the economic hole the country faces. Shadow chancellor, Mel Stride, accused Ms Reeves of 'burying' an extra £10bn of spending in her Spending Review. It came as government borrowing in June hit £20.7bn – several billion pounds higher than in May – to bridge the gap between tax receipts and spending. Inevitably, speculation is already ramping up about what the next Budget will bring. Ms Reeves has refused to be drawn on whether she might be forced to break Labour's manifesto pledge not to raise taxes on 'working people'. But as the Chancellor demonstrated last year, she's not adverse to other tax raids. The date of the next Budget is not yet confirmed, but the announcement of the Government's fiscal policy usually takes place in late October or early November. Here, Telegraph Money looks at some of what might be included, as Ms Reeves scrambles to balance the books. National Insurance on landlordsChances: 3/10 Labour has shown that it doesn't mind taking on landlords with the Renters' Rights Bill, and politicians of all stripes have seemingly had it in for property investors for years now. Landlords could be in the firing line as the Treasury looks to tax their 'passive' income as if it had been earned from a job. There are several ways in which the Treasury could target landlords. Profit from lettings could be made subject to National Insurance, for instance, or a separate tax rate could be created for rental income, which aligns with income tax bands. Taxing landlord income in the same way as employment has been called for by left-leaning think tanks before. Adam Corlett, of the Resolution Foundation, said: 'With tax rises clearly coming this autumn, the Chancellor should use this as an opportunity to make the tax system fairer and more efficient. 'One way to achieve this is to ensure different forms of income are taxed at the same rate, for example by levying National Insurance on income for rental properties. After all, there's no good reason why landlords should face lower tax rates than their tenants.' But campaign group, Generation Rent, warned that as more landlords move the ownership of their rental properties to limited companies structures, the tax raid could become less effective. More than 680,000 rental homes were owned by companies in March, research conducted by estate agency Hamptons found. Dan Wilson Craw, from the campaign group, said: 'The Treasury should bear in mind that increasing numbers of rental homes are owned by limited companies and in many cases would continue to pay a lower tax rate than an employee.' Another attack on pensions?Chances: 3/10 Labour has kicked a lot of decisions on pensions into the long grass. The debacle on winter fuel payments will also make the Government wary of being seen to target older people again. On Monday, Labour announced that a so-called 'Pension Commission' would be launched to investigate chronic under-saving for retirement. It came days after the Office for Budget Responsibility warned that the cost of the 'triple lock' on state pension payments would be three times what was originally predicted. So it seems unlikely that the Government will make any sweeping changes to pensions, as ministers have said that changes to how much employees save automatically won't happen before the next election. Maintaining the triple lock was also a manifesto pledge Labour breaks at its own peril. But that doesn't mean other reforms are impossible. Ahead of last year's Budget, rampant speculation about the future of the 25pc tax-free lump sum was rife, leading some savers to take out their cash in panic. It is believed Treasury civil servants have long wanted to reduce tax relief offered to higher- and additional-rate taxpayers on their pensions. Pension experts too have argued a 'flat rate' would be fairer, and could save vast sums of money. Sir Steve Webb, former pensions minister and partner at LCP, said: 'Major changes would be likely to affect millions of public sector workers, many of whom form the Government's core support base. 'But more technical areas such as the use of salary sacrifice for pension contributions could well come under the spotlight in the Chancellor's hunt for cash.' Cuts to cash IsasChances: 5/10 Change has been trailed for some time – expect the Budget to at least warn savers that reform is coming. Savers were braced for the Chancellor to cut the annual cash Isa allowance at a speech in the City earlier this month. But following a significant backlash from building societies and savers, Ms Reeves delayed any announcement. Rumours have been swirling since change was first mooted in January that the £20,000 limit for cash savings could be cut to as little as £4,000. Ms Reeves is keen to push the more than £300bn held in cash Isas into the stock market, preferably into London-listed businesses. But stopping the flood of money into cash Isas could make mortgages more expensive, building societies warned, because they use deposits to fulfil capital requirements and secure lending. Cynics would say the Government's real intention is to force people to hold their money in traditional savings accounts which are, of course, taxable. Tom Selby, of stockbroker AJ Bell, said: 'The Government has been clear it wants to encourage a retail investment culture in the UK and get more people investing for the long-term rather than stashing their hard-earned savings in cash, but there has been little detail beyond this. 'The Budget could provide the Chancellor with a platform to put some meat on the bones of this agenda.' Income tax thresholds freezeChances: 6/10 It's a big fundraiser – and a stealth tax. Seven million taxpayers have been dragged into paying higher rates of income tax as a result of frozen income tax thresholds. This policy of using 'fiscal drag' to boost tax receipts was introduced under the Conservatives. The thresholds, including the £12,570 tax-free personal allowance, were first frozen by the Tories in 2021. As things stand, the freeze is set to last until 2028 – and Ms Reeves committed to it ending then at last year's Budget. As wages increase to keep up with inflation, more workers are pulled into higher rates, meaning a bigger tax take. The freeze forced an extra 520,000 taxpayers into the 40p bracket in the last year, according to estimates by HM Revenue & Customs (HMRC). The OBR thinks that the freeze will raise an extra £48bn in 2029-2030, as the number of taxpayers passes 40 million. Sir Keir Starmer has refused to rule out a further freeze beyond the 2028 expiry date. It would be a relatively simple and, crucially, little-understood way to raise serious amounts of cash. But the Government could choose not to extend the freeze at this Budget, and instead do it at the next – well before it is due to run out. Fuel dutyChances: 4/10 Labour has a strong net zero agenda under Ed Miliband, but the Government may be too weak to load more costs on to drivers, many of whom are the very definition of working people. At last year's Budget, Ms Reeves extended a long-standing freeze on fuel duty. There is also a 5p per litre cut, which was introduced in March 2022, and will end, as things stand, next March. The estimated cost of the freeze for the current tax year is more than £3bn. Edmund King, of motoring company AA, told The Sun that any increase in cost at the pumps 'could be catastrophic' for the economy. The OBR said last October that unwinding the freeze in 2026 would increase inflation, as the price of fuel would increase. Wealth taxChances: 2/10 While Labour backbenchers are keen on introducing a wealth tax, the Cabinet appears to have come to its senses. Wealth taxes are difficult to administer and have backfired in most of the places they've been tried. Earlier this week, 26 MPs signed a Parliamentary motion calling for an annual wealth tax of 2pc on individual assets of more than £10m. They claimed that this could raise £24bn a year. Supporters included arch-Corbynites, alongside other Labour, Independent and several Plaid Cymru MPs. Some of Labour's biggest names, including Lord Kinnock, have advocated for a wealth tax. Ahead of this year's Spring Statement, Patriotic Millionaires, a campaign group which asks for higher taxes for the super-rich, said that 80pc of UK-based millionaires would support a wealth tax. But The Times reported earlier this week that Mrs Reeves was resisting calls for the implementation of such a levy, with Cabinet ministers calling it a 'non-starter'. Eight countries have previously implemented wealth taxes, including Austria, Denmark, Germany, Finland, Iceland, Luxembourg, Sweden and France, only to scrap them. Just four countries, Norway, Spain, Switzerland and Colombia still have a wealth tax. The exodus of non-doms since Labour took power will be in the forefront of Reeves' mind. A Treasury spokesman said: 'The best way to strengthen public finances is by growing the economy – which is our focus. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn. 'We are committed to keeping taxes for working people as low as possible, which is why at last Autumn's Budget, we protected working people's payslips and kept our promise not to raise the basic, higher or additional rates of income tax, employee National Insurance, or VAT.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data


Miami Herald
16 hours ago
- Miami Herald
Why tariffs may not be a big deal after all
Key Points: Tariffs initially caused market anxiety and a 19% S&P 500 decline from February to April.A feared spike in inflation from tariffs hasn't materialized yet. Companies have largely managed tariffs by negotiating lower prices, absorbing costs, or modest price increases, keeping overall inflation mostly in have rebounded as the tariff impact proved less severe than expected. Better-than-forecast outcomes and ongoing trade deals have lifted the S&P 500 to an all-time estimated tariff duties are not being collected because of enforcement complexity. This, along with over 50% of imports not being subject to tariffs, has lessened the drag on the economy. It wasn't that long ago that President Donald's Trump's tariff strategy kicked up a hornet's next of debate. Those favoring tariffs, which are taxes on imports, argue that they are the best way to kick-start U.S. manufacturing. Opponents believe tariffs are inflationary, sparking higher prices that can derail the U.S. economy, risking recession. The truth may wind up landing somewhere in the middle. Tariffs can slow an economy, particularly if they increase quickly and significantly, like what President Trump originally proposed this spring. However, billionaire fund manager Ken Fisher, founder of Fisher Investments, points out that in the U.S., tariffs' impact may be more muted than expected. Image source:Legendary fund manager Paul Tudor Jones equated the originally proposed tariffs as the biggest new tax since the 1960s. In February, President Trump enacted 25% tariffs on Canada and Mexico. He also implemented a 25% tariff on autos, a 10% tariff on all imports, and after much wrangling, a 30% tariff on China. Related: Billionaire fund manager explains why so many missed the stock market rally The end result of those tariffs is that the average effective tariff rate currently is 20.2%, the highest since 1911, according to the Yale Budget Lab. JPMorgan Chase calculates the effective tariff rate was 2.3% in 2024, and is about 17% currently. Either way, a big bump in import taxes led many to worry that U.S. companies would be forced to pass along higher-than-normal price increases, causing inflation to spike and household and business spending to fall. That concern contributed heavily to the S&P 500's 19% tumble from all-time highs in February to the low in April. While risk remains that companies will see revenue growth and earnings slow because of the impact of tariffs, so far, inflation remains manageable. The Consumer Price Index for June showed headline inflation of 2.7%, up from 2.4% in May, but below the 3% inflation rate registered in January. It appears as of now that companies are successfully navigating the tariff hit, mostly through a combination of negotiating lower prices with exporters, absorbing some of the costs, and more modest price increases. More Tariffs: Luxury carmakers have a more aggressive tariff battle planTop 6 cars, SUVs, & trucks that may avoid tariffs, Consumer Reports saysAmazon's quiet pricing twist on tariffs stuns shoppersLevi's shares plan to beat tariffs, keep holiday prices down Of course, some industries - such as autos, appliances, apparel, and furniture - are hit harder by tariffs. Still, overall, inflation has yet to reach levels suggesting a major retrenchment in spending that could further weaken the economy. The better-than-hoped outcome, coupled with optimism that ongoing trade deals, such as the one recently reached with Japan, which lowered tariffs to 15% from 25%, would result in lower tariffs than initially feared, has helped the stock market recover all of its losses since February. The S&P 500 closed on July 26 at an all-time high. Ken Fisher founded Fisher Investments, a money manager with $332 billion in assets under management, in 1979. Over his 45-plus year career, Fisher has seen a lot of good and bad economies and markets. Related: Another automaker is forced to shift strategy due to tariffs He's not a fan of tariffs, saying previously that they historically hurt the country imposing them more than the country they've been imposed upon. Still, he also points out that the widespread threat associated with a tariff-driven economic recession may not be as big as some make it out to be. "Tariff terror abounds, but 'tariffied' investors miss what markets don't," wrote Fisher on X. "While universal tariffs are foolish and a real economic negative, their real world bite is often muted." Fisher had previously forecast that enforcing tariffs would be incredibly difficult, and that we'd see significant difficulty in collecting them. He also opined that high tariffs would likely cause the black-market import business to soar. He appears to be right. "Through June, roughly 39% of estimated tariffs duties were actually collected - far less than many feared - owing to tariff enforcement's complexity," said Fisher. "Markets move on the gap between reality and expectations, and it's always bullish when reality settles in better than overly dour expectations." Fisher also pointed out that over 50% of imports aren't subject to tariffs. This isn't to say that the U.S. economy would be better off without tariffs in terms of growth, but only that the drag on the economy may not be as bad as originally feared. According to Yale Budget Lab, current tariffs are reducing U.S. GDP this year by about 0.8%. In short, the stock market priced in a worst-case outcome from tariffs, providing plenty of room for positive surprises. Anything less than terrible can be viewed as a win that may lift analysts expectations for revenue and profit growth - the lifeblood of stock market returns. Related: Legendary fund manager has blunt message on 'Big Beautiful Bill' The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.