What the Chancellor’s pre-Budget words may mean for the housing market

Last week’s pre-Budget speech from Chancellor, Rachel Reeves, felt like a somewhat odd, but perhaps entirely necessary, move in modern political communications.

Over the last couple of decades, we have tended to have Budget by ‘(dis)organised leak’ – and there’s no doubting the Government has been doing that in recent months, particularly with regards to the property market – but this felt like something different.

Despite not explicitly telling the country, “We’re increasing income tax and breaking our manifesto promise not to”, the very fact Reeves was at a lectern speaking about “hard choices” pretty much signalled what to expect. You don’t roll the pitch in this way unless you’re preparing the ‘players’ for what’s coming.

On the one hand it could be seen as a refreshingly adult approach to economic reality. Public debt now stands at £2.9tn, around 95% of GDP, with one pound in every 10 of taxpayers’ money being spent on debt interest alone. Against that backdrop, it’s hard to see how any Chancellor could balance the books without some contribution from working households.

Reeves’ rhetoric about rebuilding fiscal credibility and rejecting austerity may also be as much about calming the markets as it is about levelling with voters.

But for mortgage borrowers and would-be buyers already dealing with high costs, higher taxes will mean even less disposable income, just as affordability pressures are beginning to ease and we have appeared to be on a much more positive track in 2025.

For instance, even though it feels like we’re in the midst of a ‘wait and see’ mortgage/housing market until the Budget is out of the way, the Bank of England recently published data showing mortgage approvals for home purchases rose to 65,944 in September – the highest figure of 2025 so far, and up from around 55,000 a month earlier.

On the surface, that suggests a sector which was quietly gathering momentum, albeit with us not quite knowing how October played out.

Lenders are clearly competing hard, with Twenty7Tec reporting this month that 28,835 mortgage products are currently available – the highest number ever

recorded. That competition, even without a cut to Bank Base Rate but a period of falling swaps, has helped push rates gradually lower.

The question of course is whether this is truly evidence of a resurgent market or is it more of a reflection of how lenders behave in the final quarter of the year, when pipelines, completion targets and year-end figures may be driving tactical pricing decisions.

And while lenders’ product teams may be busy, the same may not currently be said for homebuyers and sellers, even taking account of those mortgage approval numbers for September.

According to new research from eXp UK, almost half of first-time buyers (47%) have paused their homebuying plans until after the Autumn Budget.

This isn’t because they’re waiting for a stamp duty cut or short-term giveaway; the majority are hoping for meaningful, long-term reforms that make housing genuinely more affordable. When asked about their biggest barrier to homeownership, 41% cited the size of the deposit and savings required, followed by a lack of Government support schemes at 21%. Only 6% blamed stamp duty.

In that context, it will be interest to see how any increase in income tax impacts their ongoing ability to save for a deposit, especially if, for example, the Renters’ Rights Act heralds an increase in rents prior to its implementation.

For advisers, this creates a familiar challenge. Clients are watching the headlines, and potentially asking for clarity that is not always easily discernible. Like a scrambled Rubik’s cube that needs solving.

The task, as always, is to help them focus on the fundamentals – what they can afford today, not what might change in few weeks’ time. In a sense, the Chancellor may have earned credit for being upfront about the scale of the challenge she faces and I think we are all now clear on what that means for income taxation. It’s certainty… of sorts.

Borrowers, sellers/buyers and the mortgage/housing market deserve the same level of clarity, but I’m not holding my breath for it prior to the 26th November. In that sense, until then we are all likely to be in something of a holding pattern, waiting to be told where we’re all going to land.