The number of mortgages approved rose by 1,000 in September, despite a cautious mood in the run-up to the November budget.
The figures, which showed that a total of 65,900 mortgages were processed for home purchases last month, provide an indication for future lending.
Experts say this increase shows that the market remains resilient, despite many potential buyers and borrowers waiting to see what Chancellor Rachel Reeves will pull out of her hat in the budget. There are rumors that she might focus on property taxes.
Meanwhile, according to today’s data from the Bank of England, the number of remortgages approved fell by 600 in September to 37,200.
This, according to Mark Harris, CEO of mortgage broker SPF Private Clients, suggests that borrowers may stay with their existing lender and refinance rather than go through the hassle of a new mortgage application with a new lender.”
The budget and property taxes
The Autumn Budget, which takes place on November 26, looms ominously on the horizon for homeowners, with the Chancellor expected to focus on property taxes.
One of the proposals the Chancellor is said to be introducing is a ‘mansion tax’, which would affect owners of homes worth £2 million or more.
There is also speculation that Rachel Reeves will apply capital gains tax to high-end main homes, reform council tax and apply National Insurance to rental income for landlords.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partnerssaid: “The housing market is under pressure following the end of the stamp duty cut in the spring, which saw thresholds return to their previous lower levels – increasing purchase costs for buyers.
“As fears mount that the Chancellor will introduce further property tax reforms, the market is stuttering as buyers and sellers pause their moving plans and wait to see what happens.
“Higher purchase costs have already led to more moderate growth in property prices, with buyers negotiating harder to keep purchases affordable and sellers recognizing that competitive pricing is key to securing a sale. As more property taxes come into question, uncertainty is rising again, with agents reporting a drop in buyer demand and in some cases halting sales.”
Haine added: “With so many potential changes in the mix, movers are proceeding very cautiously.”
Mortgage interest rates are falling
It’s not all doom and gloom: the data comes as some major lenders have cut mortgage rates in the past week. Moreover, banks have also relaxed lending criteria.
Mark Harris said: “With mortgage applications increasing again in September, the underlying resilience of the housing market is clearly visible despite the many challenges it faces.
He added: “The good news for borrowers is that lenders are eager to lend and have the money available to do so. Falling swap rates, which underpin the pricing of fixed-rate mortgages, are encouraging some big names to cut mortgage rates as they look to attract more business before the end of the year.