British lenders approved nearly 66,000 mortgages in September, the highest level since December last year, according to new Bank of England data that contrasts with signs of caution in the housing market ahead of Rachel Reeves’s autumn budget.
The BoE’s Money and Credit report showed that mortgage approvals for house purchases rose by 1,000 to 65,900 in September, while approvals for remortgaging with a different lender declined by 600 to 37,200.
Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, said: “UK mortgage approvals rose in September, showing signs of resilience in the housing market despite buyer activity taking a hit amid growing speculation that chancellor Rachel Reeves will target property taxes in her autumn budget on November 26.
Net mortgage borrowing increased sharply to £5.5bn, up from £4.3bn in the previous month, the strongest since March, when borrowing reached £13.2bn. The annual growth rate for net mortgage lending edged up to 3.2% from 3%, the highest in almost three years.
The effective interest rate on newly drawn mortgages fell by 7 basis points to 4.19%, the lowest since January 2023, extending a gradual decline that began in March. Rates on outstanding mortgage balances were unchanged at 3.89%.
Read more: What we know about Rachel Reeves’ budget so far
Haine added: “The housing market has been under pressure following the end of the stamp duty tax break in the spring, which saw thresholds returned to their previous lower levels – increasing purchase costs for buyers.
“With fears mounting that the chancellor may introduce further property tax reforms, the market is stuttering as buyers and sellers pause [their] moving plans and wait to see what unfolds.
“Higher purchase costs have already led to more subdued property price growth, with buyers negotiating harder to keep purchases affordable and sellers recognising that competitive pricing is key to securing a sale. Now, with further property taxes in contention, uncertainty is rising again, with estate agents reporting a drop in buyer demand, and in some cases, abandoned sales.”
Among potential measures, Haine mentioned the so-called “mansion tax” on properties valued above £2m, which she warned “could prove impractical and costly to enforce”. Other proposals reportedly under consideration include capital gains tax on main residences, council tax reform, and national insurance on rental income.
“One silver lining for buyers is that this uncertainty could help temper price growth in the short term, particularly at the top end of the market, delivering a boost to affordability levels for some,” she said, noting that more competitive mortgage rates and looser lending criteria had already improved access to credit.
Rachel Reeves, property taxes, mortgages, Bank of England, property tax, housing market, autumn budget, effective interest rate, Evelyn Partners
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