Brits are snapping up mortgages at the fastest pace since March, and it’s not hard to guess why. With the Autumn Budget looming and rumours of property tax hikes swirling, homebuyers are rushing to lock in deals before the Chancellor potentially raises the stakes.
Net mortgage borrowing jumped to £5.5bn in September — up £1.2bn from August — while mortgage approvals climbed to 65,900. Translation? The housing market isn’t freezing up just yet, even as uncertainty hangs overhead like a dark cloud at a British picnic.
But here’s the twist: remortgage approvals actually fell by 600, and households are stashing more cash in savings accounts. So what’s really going on? Let’s break it down.
Mortgage Approvals Hit Nine-Month High Amid Budget Fears
September’s mortgage data tells two stories at once. On one hand, mortgage approvals for house purchases are ticking upward, suggesting buyers aren’t sitting on their hands. On the other, the slight dip in remortgaging and the uptick in savings point to caution creeping into the market.
Nathan Emerson, chief executive of Propertymark, called the rise in approvals “encouraging,” noting that despite economic headwinds, people are still climbing the housing ladder. But let’s be real — when you’ve got whispers of capital gains tax reforms and potential stamp duty changes floating around Westminster, it’s no wonder some buyers are hitting the gas before the road gets bumpier.
Why Are Buyers Rushing?
Simple: fear of missing out on current conditions. If property taxes do rise in the Budget, getting a mortgage now could save buyers thousands down the line. It’s classic pre-Budget behaviour — when speculation meets anxiety, action follows.
Remortgaging Takes a Hit as Homeowners Hold Tight
While new mortgage lending is up, remortgage approvals fell to 37,200 in September. That’s 600 fewer than August, and it suggests homeowners are playing wait-and-see with their existing deals.
The effective interest rate on new mortgages also dropped by 7%, which should be good news. But Alice Haine, personal finance analyst at Bestinvest, thinks the market is “stuttering” as buyers and sellers pause to see what the Chancellor unveils.
Here’s the reality: if you’re already locked into a decent rate, why remortgage now when the Budget could shake things up in a few weeks? Better to sit tight and reassess once the dust settles.
Business Borrowing: A Tale of Two Sectors
It’s not just homebuyers feeling jittery. Business borrowing data shows a split between big players and smaller firms.
- Large businesses saw their annual borrowing growth rate dip from 8.7% to 8.3% in September.
- SMEs, however, increased their borrowing growth from 1.3% to 1.6% — the highest rate since August 2021.
What does this mean? Smaller businesses might be more optimistic (or desperate) for cash flow, while larger corporations are pulling back slightly, possibly bracing for higher taxes or tighter economic conditions ahead.
Households Aren’t Panicking — They’re Just Parking Cash
Consumer credit borrowing held steady at £1.5bn, unchanged from August. But here’s what’s interesting: households deposited £7.9bn into bank accounts in September, with £5.9bn going into interest-bearing accounts and £2.4bn into ISAs.
Does this mean Brits are suddenly becoming super-savers? Not quite. Alex Kerr, economist at Capital Economics, says it’s more about where people are holding their money rather than a surge in precautionary saving. With interest rates still relatively high, it makes sense to shift funds into accounts that actually pay you something.
Still, Kerr warns that “tax rises on households in the Budget could dampen activity next year.” If wages get squeezed further or disposable income takes a hit, spending could slow — and that ripple effect hits everything from retail to housing.
What Happens Next?
The Autumn Budget is the elephant in the room. If property taxes rise — whether through stamp duty tweaks, capital gains adjustments, or something else entirely — the current uptick in mortgage approvals could cool off fast.
But for now? The housing market is holding its breath, and buyers are making moves while they still can. If you’re in the market, it might be worth acting sooner rather than later. If you’re remortgaging, though, waiting a few more weeks to see the Budget details could save you headaches (and cash).
Bottom line: The UK housing market is still moving, but it’s moving cautiously. And with good reason.
FAQ
Q1: Why did mortgage approvals increase in September?
A: Buyers are likely rushing to secure mortgages before potential property tax rises in the Autumn Budget. It’s classic pre-Budget behaviour driven by speculation and urgency.
Q2: Why are remortgage approvals falling?
A: Homeowners are playing it safe, waiting to see what the Budget brings before committing to new deals. If tax or rate changes are coming, it makes sense to hold off.
Q3: Are households saving more because of economic fears?
A: Not exactly. Households are shifting money into interest-bearing accounts and ISAs to take advantage of higher rates, rather than stashing cash out of panic.
Q4: How could the Budget impact the housing market?
A: If property taxes rise or stamp duty rules change, buyer demand could cool quickly. Higher taxes on homeowners could also dampen spending and economic activity in 2025.
Q5: Should I buy a home now or wait until after the Budget?
A: If you’re ready and can afford it, buying now might lock in current tax conditions. But if you’re on the fence, waiting a few weeks for Budget clarity could help you make a more informed decision.
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Effective Date: 15th July 2025
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