Mortgage approvals dip as budget rumours slow buyers and push savers toward cash Isas

Mortgage approvals for home buyers went down in October as people got nervous because of Budget rumours. The Bank of England said 65,018 mortgages were approved in October, which is less than 65,647 approvals in September. The October approvals were still higher than August, which had 64,735 approvals.

There were about 33,100 remortgage approvals in October, the lowest since February this year, and this only includes people switching to a different lender. Richard Donnell from Zoopla said demand fell because people were unsure about “property tax announcements in the Budget”, as stated in the report by Yahoo Finance. “Demand for mortgages to buy homes fell in October, as uncertainty around property tax announcements in the Budget stalled activity in the housing market.” He said mortgage approvals are now at their five-year average, which means around 1.15 million housing sales per year.

Donnell also said that since the threat of extra taxes on homes between £500,000 and £2 million is gone, demand should go up in early 2026. “…we expect to see a rebound in demand as we enter the early months of 2026”, as reported by Yahoo Finance. Zoopla earlier said rumours of taxes on homes worth over £500,000 caused confusion in the housing market. But Zoopla also said the final Budget measures were not as bad as many homeowners feared.

New property tax rules create mixed reactions

The Government announced a new high-value council tax surcharge in England for homes worth more than £2 million starting April 2028. There will be four price bands, starting at £2,500 yearly for homes above £2 million, and going up to £7,500 for homes above £5 million. Nathan Emerson from Propertymark said Budget rumours may have caused the drop in approvals. “Speculation surrounding the autumn Budget may have played a role in contributing towards a decrease in the number of mortgage approvals during this period.”

Jason Tebb from OnTheMarket said approvals fell only slightly in October. “Approvals decreased only slightly in October, demonstrating resilience and determination on the whole from buyers and sellers to proceed with their moves”, as noted by Yahoo Finance.

Simon Gammon from Knight Frank Finance said constant policy leaks hurt confidence. “The steady drip of policy leaks weighed heavily on sentiment.” He added the fall was small and activity has been steady like pre-pandemic levels since summer. “Monthly transaction activity has been broadly in line with pre-pandemic levels since the summer…”.

Cash Isa changes push savers to act quickly

Gammon also said some uncertainty is now gone and the Bank of England may cut the base rate in December, which could lower mortgage rates. He said this could release pent-up demand in spring 2026. “…we expect some pent-up demand to be released as we move into a stronger spring selling season.” Estate agent Jeremy Leaf said longer pauses usually lead to bigger resets.

“We have often found in similar circumstances that the bigger the pause, the larger the reset.”

He expects a rebound in the next few weeks and a stronger recovery in early 2026. Consumer credit (non-mortgage borrowing) grew at 7.2% yearly in October, the same as before. Credit card borrowing grew slightly to 10.9% from 10.8%, as per the report by Yahoo Finance. Households put £6.8 billion into banks in October, after £8.2 billion in September. Out of that, £4.2 billion went into cash Isas, up from £2.4 billion in September.

The Budget said the adult cash Isa limit will drop to £12,000 from April 2027. But the overall Isa limit stays at £20,000, so people reaching £12,000 may put more money in stocks and shares. People over 65 can still use the full £20,000 cash Isa limit. Alice Haine from Bestinvest said many people moved money into cash Isas because they expected changes. “One data point that stands out… is the £4.2 billion funnelled into cash Isas in October…”, as per the report by Yahoo Finance. She said the new £12,000 limit brings some relief because earlier rumours suggested a much lower limit.

Haine said retirees keeping the full allowance was a surprise. She explained that the leftover £8,000 for under-65s is meant for investments. She said HMRC will block people from trying to use investment Isas like cash accounts. “…the Government will ban transfers from stocks and shares Isas to cash Isas…” She added that Isas will now become more complex. “The changes will make Isas even more complex.”

Mark Hicks from Hargreaves Lansdown said cash Isas are booming because people expected cuts. “The boom in cash Isas continues.” He said speculation kept Isa rates higher than normal. He expects even more Isa inflows in November, as noted in the report by Yahoo Finance. Hicks also told savers to take advantage of current fixed rates before the expected base rate cut. Borrowing by large businesses grew at 6.9% in October, slower than 8.2% in September. Borrowing by small and medium businesses stayed the same at 1.6%.

FAQ

Q1. Why did mortgage approvals drop in October?

Mortgage approvals fell because Budget rumours about possible property taxes made buyers nervous and slowed activity.

Q2. Why are people putting more money into cash Isas?

Savers rushed to cash Isas after hearing that the Budget would cut the cash Isa limit to £12,000 from 2027.