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The Bank of England has issued an update to UK homeowners, as fears grow over the possibility Chancellor Rachel Reeves may target property tax in the next Budget. September's Money and Credit report highlights that the mortgage market is holding up, even though borrowers still face an element of uncertainty. The data suggested that mortgage costs for new borrowers dropped to the most affordable point in three years last month. READ MORE: Tesco shares exact way to access Christmas delivery slots one week early The average effective interest rate on new mortgages went down to 4.19 per cent, which is the lowest level since January 2023, GB News reported. Figures also highlighted that there were 65,900 new home loans agreed in September, which showed a small rise up by 1,000 approvals from August. However, remortgage approvals with other lenders dropped a small amount to 37,200. While it has been shown Brits taking out a new mortgage may be benefitting from lower rates, those who are coming to the end of fixed-rate contracts taken out prior to December 2021 are still seeing big increases in monthly payments after a remortgage. Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners said: "UK mortgage approvals rose in September, showing signs of resilience in the housing market despite buyer activity taking a hit amid growing speculation that Chancellor Rachel Reeves will target property taxes in her Autumn Budget on November 26. "While new borrowers may benefit from lower rates, homeowners coming off historic low fixed-rate deals, secured before interest rates began rising in December 2021, still face a jump in monthly repayments unless they've cleared a sizeable chunk of their mortgage balance." Some Brits have shown concerns over a possible tax change in the next Budget, but it appears as though the housing market has remained steady. READ MORE: 'I know Sarah Ferguson - here's the real reason behind her royal downfall' The average rate on mortgages which already exist has remained at 3.89 per cent in September, displaying further the gap between older, lower-cost deals and higher borrowing rates today. Rachel Springall, Finance Expert at Moneyfactscompare.co.uk commented: "Regardless, there will be borrowers sitting on the fence until the Budget, and others stuck due to a short supply of affordable housing. "Depending on the area of the UK, house prices may be stretching borrowers searching for a new deal, so it’s important to try to increase their deposit or build up more equity in their home to make up the difference."
