The latest Money and Credit report from the Bank of England shows that in October, net mortgage approvals for house purchase decreased by 600 to 65,000, while approvals for remortgaging fell by 3,600 to 33,100, the lowest since February 2025 (32,900).
The drop in activity is widely attributed to purchasers sitting on their hands until the delivery of last week’s Budget.
In response, Jeremy Leaf – north London estate agent and a former RICS residential chairman – says: “Mortgage approvals provide the best evidence of likely market activity over the next few months, and it’s clear from these figures that speculation about the Chancellor’s Budget took its toll.
“On the ground, we are seeing plenty of resilience and a determination to keep transactions running even though they are becoming more protracted and often subject to some tough renegotiating. Affordability is gradually improving, especially as another, earlier base rate cut is more likely.
“We have often found in similar circumstances that the bigger the pause, the larger the re-set. As a result, we are expecting a rebound over the next few weeks and a more sustained recovery in early 2026 based on what buyers and sellers have been telling us recently.”
Simon Gammon – managing partner at Knight Frank Finance – adds: “Mortgage approvals for house purchases dipped in October as speculation mounted over which tax rises would be announced in the November budget. The steady drip of policy leaks weighed heavily on sentiment.
“That said, the fall in approvals was small. Monthly transaction activity has been broadly in-line with pre-pandemic levels since the summer, which is a display of resilience given the weakening economy and the uncertain fiscal outlook. Aspects of that uncertainty have now passed and the Bank of England looks on course to cut the base rate in December. This should allow lenders to keep trimming mortgage rates, and we expect some pent up demand to be released as we move into a stronger spring selling season.”
Alice Haine, an analyst at BestInvest by Evelyn Partners, comments: “Property tax fears ahead of the Budget had dented sentiment with some sellers accelerating deals to complete before the Chancellor delivered her fiscal statement, while others paused or abandoned plans altogether. The latest tax changes are expected to dampen demand further – particularly at the top of the end of the market – with estate agents bracing for collapsed deals and weaker buyer appetite.
“Not all the feared property tax changes materialised, however, which may see some breathing a sigh of relief. The proposal to apply capital gains tax to high-value main residences did not appear, nor did widespread council tax reform. Fears that National Insurance would be applied on rental income for landlords were not realised but was essentially replicated with the 2p added to income tax on property income.
“One silver lining for buyers is all these changes could subdue price growth, particularly at the higher end, improving affordability levels in pricier parts of the country, such as London and the South-East. Will we see more homes valued just under the £2 million mark, for example, to escape that dreaded mansion tax?
“Affordability has already received a boost thanks to more competitive mortgage rates in recent months than at the peak of the post-pandemic borrowing crisis. Hopes of a December rate cut – just in time for Christmas – and banks relaxing lending criteria with more low-deposit or longer-term mortgages could make the road ahead more promising for movers.
“The effective rate on newly drawn mortgages eased to 4.17% in October from 4.19% the previous month. However, the effective rate on the outstanding stock of mortgages remained unchanged for the third consecutive month, reflecting those homeowners coming off historic low fixed-rate deals secured before interest rates began rising in December 2021. Those yet to refinance should expect higher monthly repayments unless they’ve been able to pay down their mortgage balance.”
This article is taken from Landlord Today