LONDON – British lenders approved more mortgages in September 2025 than in any month so far this year, according to data released by the Bank of England (BoE) on Wednesday. The figures signal renewed momentum in the UK housing market despite growing uncertainty ahead of Chancellor Rachel Reeves’ upcoming budget.

Mortgage Approvals Reach 10-Month High

The BoE reported that mortgage approvals for home purchases rose to 65,944 in September, marking the highest level since December 2024. This figure beat economists’ median forecast of 64,000 approvals, according to a Reuters poll.

The data surprised many analysts who had anticipated a slowdown amid speculation that Reeves’ November 26 budget could include higher property taxes or levies on home ownership.

Resilient Housing Market Defies Caution

While recent housing indicators had hinted at a softening market—due to inflation pressures, high borrowing costs, and uncertainty around fiscal policy—the latest BoE data suggests that buyer confidence remains stronger than expected.

Analysts said the pickup in mortgage activity may reflect pent-up demand and anticipation of potential rate cuts from the BoE in early 2026, as inflation shows signs of cooling.

“Despite policy headwinds, these figures highlight an underlying resilience in the housing sector,” said Alex Kerr, UK economist at Capital Economics. “However, higher taxes on households in the upcoming budget could dampen activity next year.”

Consumer Borrowing Holds Steady

In addition to mortgage data, the BoE’s report showed that net consumer borrowing rose by £1.49 billion ($2.00 billion) in September, nearly matching forecasts and suggesting that consumers have not significantly tightened their spending ahead of the fiscal announcement.

Though borrowing was slightly below August’s £1.75 billion, the annual rate of consumer credit growth accelerated to 7.3%, its fastest pace since October 2024.

This steady credit growth aligns with last week’s retail sales data, which showed an unexpected 0.5% increase in September, further supporting the view that consumer spending remains robust despite economic headwinds.

Economic Outlook Ahead of Budget Announcement

The UK economy has shown mixed signals heading into the Reeves budget, with wage growth cooling but inflation remaining above the BoE’s 2% target. Economists expect the chancellor to announce tax increases targeting property and higher-income households as part of her fiscal tightening measures.

Market analysts caution that these potential changes could temporarily slow the housing market early next year as buyers wait for clarity on new levies.

Sterling and Market Reaction

The British pound held steady around $1.34 (£1 = $1.34) following the release, with traders awaiting further BoE commentary on interest rates.

($1 = £0.7451)