Mortgage approvals across the UK climbed to their highest level in nine months this September, suggesting that buyer confidence is returning as borrowing costs continue to ease. The latest figures indicate that many buyers are pushing ahead with property purchases despite uncertainty surrounding a possible tax overhaul in the upcoming Budget.
According to the Bank of England, 65,940 mortgages were approved for house purchases in September — around 1,000 more than the previous month. This marks a steady rise in buyer activity, highlighting a renewed sense of optimism in the housing market after a period of slowdown earlier in the year.
At the same time, the “effective” interest rate — referring to the actual rate paid on new mortgages — dropped to 4.19% in September. This is the lowest level recorded since the beginning of January, offering much-needed relief to both first-time buyers and homeowners looking to secure better rates.
The level of overall mortgage lending also saw a notable increase, rising by 3.2% in September. This marks the fastest pace of growth since early 2023, signalling that banks and lenders are beginning to see more movement within the property market as rates become more manageable for borrowers.
In total, individuals borrowed a net amount of £5.5 billion in mortgage debt during September — the highest monthly figure since March. The surge earlier this year was driven by a rush of homebuyers taking advantage of stamp duty savings before the incentive ended at the start of April.
While many property experts point to these figures as evidence of a more stable housing market, others note that ongoing speculation about potential tax reforms could still impact buyer sentiment in the months ahead. With the Autumn Budget fast approaching, discussions have turned to whether Chancellor Rachel Reeves will introduce new property-related tax measures.
There are growing expectations that the Labour government may consider changes to property taxes in an effort to generate more revenue. However, it remains uncertain what form these adjustments might take, and this lack of clarity has left some buyers hesitant to proceed with major purchases.
Despite this uncertainty, the latest data suggests that housing market activity remains resilient. Buyer interest continues to build, particularly among those who had been waiting for mortgage rates to fall further before taking the plunge into homeownership.
Not all lending categories, however, experienced growth. Remortgage approvals declined slightly, with around 600 fewer applications compared to August. It’s important to note that these figures only represent remortgaging with a different lender, not internal rate switches.
Meanwhile, consumer borrowing slowed down during the same month. The total amount of consumer credit taken out by individuals fell from £1.7 billion in August to £1.5 billion in September. This could indicate that households are becoming more cautious with their spending as the economic outlook remains mixed.
Sarah Coles, head of personal finance at Hargreaves Lansdown, noted that “six months of falling mortgage rates have played a key role” in the rise in approvals. However, she also emphasised that many potential movers are “still playing the waiting game,” uncertain about what the next few months will bring.
Coles added that concerns about job stability and the upcoming Budget are causing some buyers to delay their decisions. “Potential movers are still worried about what the future holds, as more weakness creeps into the jobs market, and the Budget looms,” she explained.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, echoed this sentiment. She highlighted the “growing speculation” that Chancellor Rachel Reeves may target property taxes in her autumn Budget on 26 November. Such changes could significantly affect affordability and market activity if implemented.
Haine also pointed out that the housing market has been under strain since the end of the stamp duty tax break earlier this year. When thresholds reverted to lower levels, purchase costs for many buyers increased, making it more difficult for first-time buyers and second movers alike to take the next step.
Some estate agents have reportedly noticed a cooling in demand, with a few even witnessing buyers withdrawing offers amid the uncertainty. However, other analysts believe this hesitation will be temporary, as underlying demand for housing remains solid.
Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said that the recent lending data showed “few signs of pre-Budget worries creeping into activity.” He added that both consumers and businesses “appear confident” despite the broader economic challenges.
Even so, Jordan-Doak cautioned that risks remain. “We still think that the risks to the housing market for the rest of this year lie to the downside,” he said. “Buyers may take a wait-and-see approach to the Budget, but the strong mortgage approvals figures suggest fundamental demand is holding firm.”
He concluded that, although growth might be gradual, house prices are likely to edge higher over the coming months. This steady progress reflects the market’s resilience and its ability to adjust even amid uncertainty about future fiscal policies.
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