- Money
Finance experts suggested that speculation over potential Budget measures may have had an impact on households’ sentiment.
Vicky ShawMonday 01 December 2025 10:52 GMT
open image in gallerySome housing market experts said they expect to see a rebound in demand (Joe Giddens/PA) (PA)
Sign up to our free money newsletter for investment analysis and expert advice to help you build wealth
Sign up to our free money email for help building your wealth
Sign up to our free money email for help building your wealth
Email*SIGN UPI would like to be emailed about offers, events and updates from The Independent. Read our Privacy notice
Mortgage approvals to home buyers dipped and savers shovelled more cash into their Isas as rumours about various potential measures swirled in the run-up to the Budget.
The number of mortgages being approved for house purchase slipped back in October compared with the previous month, according to Bank of England figures.
Some 65,018 mortgages were approved for house purchase in October, the Money and Credit report said.
The figure was lower than 65,647 mortgage approvals for house purchase recorded in September, but higher than the 64,735 in August.
There were also around 33,100 approvals for remortgaging in October, marking the lowest total since February this year. The remortgaging figures only capture borrowing with a different lender.
Richard Donnell, executive director at Zoopla, said: “Demand for mortgages to buy homes fell in October, as uncertainty around property tax announcements in the Budget stalled activity in the housing market.
“Mortgage approvals are back to their five-year average, which points to housing sales of 1.15 million a year, and now that the threat of additional property taxes has been lifted from homes between £500,000 and £2 million, we expect to see a rebound in demand as we enter the early months of 2026.”
Zoopla previously said rumours of taxes, possibly on homes valued at more than £500,000, in the run-up to the Budget created uncertainty across the housing market.
But the website also said that measures directly impacting the housing market had proved less significant than many homeowners had feared.
Get a free fractional share worth up to £100.Capital at risk.
Terms and conditions apply.
Go to websiteADVERTISEMENT
Get a free fractional share worth up to £100.Capital at risk.
Terms and conditions apply.
Go to websiteADVERTISEMENT
In the Budget, the Government announced a high value council tax surcharge in England on homes above £2 million from April 2028.
There will be four price bands with the surcharge starting at £2,500 a year for properties worth more than £2 million, and rising to £7,500 for properties worth more than £5 million.
Nathan Emerson, chief executive of Propertymark, said: “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, president of OnTheMarket, said: “Approvals decreased only slightly in October, demonstrating resilience and determination on the whole from buyers and sellers to proceed with their moves.”
Simon Gammon, managing partner, Knight Frank Finance, said: “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.”
Jeremy Leaf, a north London estate agent, said: “We have often found in similar circumstances that the bigger the pause, the larger the reset. 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.”
Looking at non-mortgage borrowing, the annual growth rate for consumer credit remained unchanged at 7.2% in October.
Within the total, the annual growth rate for credit card borrowing slightly increased, to 10.9%, from 10.8%.
In October, households deposited an additional £6.8 billion with banks and building societies, following net deposits of £8.2 billion in September. The latest figure included £4.2 billion of cash going into Isas – jumping from £2.4 billion in September.
In the Budget, the Government announced that the annual adult cash Isa subscription limit will be slashed to £12,000 from April 2027.
The annual overall contribution limit into adult Isas will remain at £20,000, potentially encouraging some savers who reach the £12,000 cash Isa limit to put more money in stocks and shares. Over-65s will retain the full £20,000 annual cash Isa allowance.
Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: “One data point that stands out, given the Budget announcements on the future of Individual Saving Accounts (Isas), is the £4.2 billion funnelled into cash Isas in October, almost doubling September’s subscriptions.
“Those that did shovel more funds into these accounts were likely to have been spurred by speculation that cash Isa subscriptions could be capped well below the current £20,000 limit.
“The cash Isa changes in the Budget were widely anticipated, with the cap on the subscription limit to £12,000 landing as expected – offering some relief compared to earlier proposals for a much lower ceiling.
“However, some details were surprising. This included the plan to limit the subscription cap to the under-65s, leaving retirees free to continue using the full £20,000 allowance for cash savings.”
She added: “The decision to earmark the remaining £8,000 Isa allowance for pre-retirees for investments aligned with the speculation.
“But the other surprise came when HMRC made it clear in the aftermath of the Budget that it would take measures to deter savers from attempting to sidestep the new cash Isa rules by holding cash in their stocks and shares Isa instead – a workaround currently permitted.
“To prevent under-65s circumventing the new cash Isa regulations when they come into force in April 2027, the Government will ban transfers from stocks and shares Isas to cash Isas, apply a yet-to-be-known charge on interest earned on cash held in investment Isas and potentially limit access to investments considered ‘cash like’ which might impact the ability to hold money market funds.”
Ms Haine said: “The changes will make Isas even more complex.”
Mark Hicks, head of active savings, Hargreaves Lansdown, said: “The boom in cash Isas continues. October saw even more money pile into them than September, ahead of expectations of cash Isa cuts in the Budget.
“This speculation has helped keep rates higher than they would otherwise have been, and I expect to continue to see an increase of flows into Isas when we get November’s data.”
He added: “Ahead of the expected (Bank of England) base rate cut later this month, savers should take advantage of these elevated fixed terms while they’re around.”
The annual growth rate of borrowing by large businesses slowed to 6.9% in October, from 8.2% in September. The annual growth rate of borrowing by SMEs (small and medium-sized enterprises) was unchanged from September at 1.6%.
