The Chancellor’s Budget is aiming to raise £40bn from a raft of new tax changes, including a headline move to increase national insurance contributions for employers from April next year.

For the mortgage market, while Rachel Reeves reaffirmed Labour’s commitment to long-term housing targets, there were few announcements directly impacting brokers and lenders.

The Chancellor did announce an increase to the stamp duty land surcharge for second homes, by 2% to 5%, a move which is set to come in from tomorrow.

She also did not announce a CGT rise on residential property, which had been feared by landlords in the lead up to the Budget, with these rates to remain at 18% and 24%.

The Budget’s impact on the mortgage industry might instead be felt by the tax changes to capital gains (CGT) and inheritance tax (IHT), and the potential impact this could have on both borrowers and landlords.

MoneyAge has rounded up some reaction from the mortgage industry to the Budget and the implications that could be felt across the market.

CEO of Spicerhaart and Just Mortgages, John Phillips, said: “Today’s Budget was an opportunity for Labour to show that its plans for housing are far more than just increasing supply. Sadly, this wasn’t the case, with a real lack of support for buyers and the wider housing market.

“While increasing supply is necessary, we also need tangible support right now to increase routes to homeownership and reduce affordability pressures, particular for first-time buyers.

“While not mentioned, it seems the stamp duty relief will still end in April, removing important financial support for buyers and downsizers, while creating another cliff-edge deadline for the industry to deal with. We will have to see if the almost instant increase in stamp duty on second homes does indeed increase transactions as the Chancellor hopes, or whether as some worry, it will impact rental supply further and send rents higher.”

Director at April Mortgages, Rachael Hunnisett, said that Reeves had taken steps to “free up much-needed capital” for public investment, in an effort to get the economy back growing more quickly.

However, Hunnisett added: “Opposition voices are raising concerns. Earlier this week, Jeremy Hunt warned of ‘mortgage misery’, with fears that these changes might disrupt markets, push-up borrowing costs for lenders, and ultimately affect consumers.

“This warning shot will hit hard for borrowers nationwide, many of whom are still feeling the effects of rate hikes after the autumn 2022 mini-Budget, which sparked major market volatility.

“The impact is even greater with the soaring cost of living and the so-called ‘stealth tax’, as income tax brackets are frozen until 2028.

“If there’s one thing for certain, it’s that ambiguity is not in the best interests of the mortgage market and homeowners.”

Managing director of capital markets and LiveMore, Simon Webb, added that the Budget could create “potential implications” for older borrowers, particularly those aged 55 and over who may be considering property purchases or equity release options.

“The Chancellor’s focus on stability and growth in public finances, coupled with increased support for affordable housing, sends a clear message about the Government’s commitment to addressing long-term economic challenges,” said Webb.

“However, for those nearing or in retirement, the adjustments to stamp duty and CGT will add an extra layer of consideration when planning for later-life financial stability. These changes may lead many older borrowers to rethink their property investments or inheritance strategies, especially with additional financial pressures on second homes and buy-to-let properties.”

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