What the 26 November 2025 Budget
Means For UK Mortgages

The 26 November 2025 Budget does not directly set mortgage rates, but it does change the tax and spending backdrop that shapes what lenders, landlords and homebuyers can afford. What is moving UK mortgage pricing now is the combination of a tighter fiscal stance, higher taxes on property income, frozen income tax thresholds and ongoing reforms to housing supply, all landing while Bank Rate sits at 4% and markets are watching for the first rate cut.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

What Is Driving UK Mortgage Pricing After The Budget

Fixed-rate mortgages in the UK are largely driven by expectations for future interest rates, which show up in SONIA swap rates and gilt yields, rather than by the Budget itself.

The Bank of England’s Monetary Policy Committee kept Bank Rate at 4% at its November meeting and signalled it is still focused on bringing inflation back to 2%.

The Office for Budget Responsibility forecasts inflation easing gradually but returning to the 2% target only in 2027, which suggests interest rates may come down over time but not quickly.

SONIA swap rates, which shape fixed mortgage pricing, are sitting in the mid-3% range for the main tenors, and the 5-year gilt yield has been trading just under 4%.

Gilt yields edged lower after the Budget as markets absorbed the tighter fiscal stance and additional tax-raising measures, which are generally seen as mildly disinflationary. This is supportive of lower swap rates over time.

Budget 2025: Key Tax Changes Affecting Homeowners And Landlords

Several Budget measures are directly relevant to the housing and mortgage market:

Income tax thresholds remain frozen until 2030–31, meaning more people will gradually move into higher tax bands as wages rise. This is known as Fiscal Drag - it is effectively a stealth tax where the Government benefits from high inflation.

From April 2027, new higher tax rates will apply specifically to property income: 22% basic, 42% higher and 47% additional rate.

No changes were made to Stamp Duty Land Tax for homebuyers.

Dividend and savings income tax rates will also increase, affecting deposit planning and investment structures for some households.

For mortgage holders and buyers, the practical effects include:

Reduced take-home pay over time as fiscal drag continues
Lower net rental yields for landlords under the upcoming property income tax structure
More emphasis on efficient deposit and portfolio planning for buyers and investors

Housing Supply, New Towns And The National Housing Bank

The Budget places heavy emphasis on housing investment and long-term supply measures:

Significant capital spending is committed to infrastructure and new affordable homes.
A new National Housing Bank will bring together public and private investment to support housing projects.
At least three new towns are planned this Parliament, each with at least 10,000 homes.
Funding is being devolved to major city regions to accelerate new-build activity and regeneration.

For the mortgage market, these measures matter because:

Greater long-term supply can ease some price pressure
Regional variations in housing delivery could influence availability and pricing
New-build schemes may lead to lender adjustments in criteria or pricing

Bank Of England, Inflation And Market Reaction

The Budget sits alongside a broader trend of easing inflation and a Bank of England cautiously approaching the point where cuts may be considered:

Inflation remains above target but has eased significantly since earlier peaks.
Bank Rate is 4.0%, down from 5.25% over the past year.
The Budget is expected to reduce inflation slightly in the medium term.

In markets:

Gilt yields dipped modestly following the Budget
Swaps remain stable in the mid-3% range
Lenders are more likely to continue incremental changes to fixed-rate products rather than major moves

What This Could Mean For First-Time Buyers And Remortgagers

For first-time buyers:

No new stamp duty relief or schemes were introduced
Deposit building may feel slower as frozen tax thresholds and higher savings tax reduce take-home pay and net interest
House price growth is projected to be modest rather than rapid

For remortgagers:

Any Budget effect on rates is likely to be gradual
Affordability tests will continue to factor in higher effective personal taxation
Borrowers may weigh the certainty of current fixed rates against potential future movements, depending on economic data

Implications For Buy-To-Let Landlords And Specialist Borrowers

Landlords face a notable shift:

The new property income tax rates from 2027 will reduce net yields unless rents rise or portfolios are restructured
Combined with earlier tax changes, this may influence whether landlords retain, exit or remortgage properties
Portfolio gearing, fixed-rate choices and ownership structures could become more important considerations

Specialist groups such as seafarers or internationally mobile professionals may also feel the combined impact of tax changes, currency exposure and interest-rate uncertainty when planning remortgages or future purchases.

Key Numbers (Market-Watch Snapshots)

Bank Rate: 4.00%
CPI inflation: 3.6%
SONIA swap rates: around mid-3% levels
5-year gilt yield: around 3.9%
New property income tax rates from April 2027: 22%, 42%, 47%

Figures as of 26 November 2025, London.

The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you’d like to understand what these moves could mean for you, speak to Mortgage One, we can explain your options and timings based on your specific circumstances.

Some Buy to Let mortgages are not regulated by the Financial Conduct Authority.

FAQs

1. Will the 26 November Budget change my existing mortgage rate straight away?
   No. Existing variable and tracker mortgages still follow Bank Rate or lender formulas, and fixed-rate deals are priced off swap markets. Any Budget impact on mortgage rates is likely to be gradual rather than immediate.

2. How do higher property income tax rates affect landlords’ mortgage decisions?
   The new property tax rates from April 2027 will reduce post-tax rental income. This may prompt some landlords to revisit portfolio gearing, review fixed-rate options or assess whether to retain or sell properties.

3. Did the Budget make a Bank Rate cut more or less likely?
   By raising extra revenue, the Budget slightly reduces medium-term inflation pressure, which is supportive of future rate cuts in principle. However, the Monetary Policy Committee will still focus on incoming economic data.

4. Is there any new direct help for first-time buyers in this Budget?
   No new stamp duty relief or major buyer schemes were introduced. A consultation on a simpler ISA for first-time buyers is planned for 2026.

5. I am due to remortgage in 2026–27 – should I wait to see how the new tax rates and future Budgets play out?
   That depends on your risk tolerance, the end date of your current deal and your broader financial position. Economic data and Bank of England decisions can move rates either way, so reviewing options early can help you understand potential outcomes.