As September begins, the UK mortgage and housing market stands at a crossroads. Interest rates are lower than they’ve been in more than two years, offering a welcome lifeline to stretched borrowers. Yet the property market is showing signs of fatigue, with prices dipping in August for the first time in months. And with the Autumn Budget just weeks away, the prospect of new taxes is creating uncertainty for homeowners, landlords and investors alike.
This month, then, feels less like a turning point and more like a pause—a moment where the direction of travel could shift sharply, depending on what happens in Westminster and at the Bank of England.
Are interest rates finally moving in the right direction?
Back in early August, the Bank of England cut the base rate to 4.00%, its lowest level since March 2023. For mortgage holders, this was a significant moment. After two years of painful rises, where many saw their monthly repayments double, the tide has begun to turn. Fixed-rate products are already creeping lower, and lenders are competing harder for business.
But the Bank’s decision was far from unanimous. The vote split 5–4, with nearly half of the Monetary Policy Committee warning that inflation remains too stubborn. At around 4%, consumer price growth is still running well above the Bank’s target.
That sets the scene for the next decision on 18 September. While a handful of optimists had hoped for a series of rapid cuts, the current expectation is that the Bank will hold rates steady this month, allowing time to assess whether inflation finally begins to ease.
For borrowers, that means relief—but not release. Mortgage rates may fall further into 2026, but September is likely to bring stability rather than another dramatic move.
What’s happening to house prices?
The property market has entered the autumn with a mixed outlook. On one hand, Nationwide’s latest index revealed a 0.1% fall in August prices, the first slip in months and a sign that affordability pressures remain. Annual growth has slowed to 2.1%, its weakest since last summer.
Surveyors are also reporting a slowdown. The RICS market survey showed weaker buyer enquiries and fewer agreed sales in July, with its headline balance on house prices falling to -13%, from -7% the previous month.
And yet, activity hasn’t dried up entirely. In fact, completions rose for the third month in a row in July, with 95,580 sales completed—higher than both last year’s figures and the five-year average. Both Halifax and Nationwide reported small monthly gains in July too, suggesting the market still has life where affordability allows.
This push-and-pull reflects the reality: the UK housing market is finely balanced, supported by lower mortgage rates but capped by household budgets still under pressure.
How are different regions performing?
One of the more striking features of today’s market is the regional divide.
- Northern England and Scotland: These regions remain more resilient, largely thanks to lower price-to-income ratios. Buyers can still access homes within a reasonable stretch of their earnings, meaning demand hasn’t fallen as sharply as in the South.
- London: After several years of sluggish performance, the capital is staging something of a comeback. International buyers are returning, the return-to-office trend is supporting demand, and analysts believe London could outperform the national average this year.
- South of England: In contrast, pricier southern regions remain under more pressure. Even with cheaper mortgages, affordability here is stretched to the limit, and many buyers are waiting for either further rate cuts or for prices to adjust downward.
For sellers, this means knowing your market is key. Homes in affordable areas are still moving, but overpricing in sensitive regions can lead to long delays.
What’s the outlook for mortgages this autumn?
With rates steadying, lenders are cautiously optimistic. Several high street banks have trimmed the cost of their two- and five-year fixed products, bringing some back below 5% for the first time in months. Tracker mortgages, meanwhile, are less attractive unless borrowers believe rate cuts will come sooner than expected.
One trend that may grow in popularity this autumn is longer-term fixed mortgages—seven- and ten-year deals—appealing to those who value certainty. For younger buyers, however, affordability tests remain strict, and deposit requirements are still a hurdle.
First-time buyers may also find themselves squeezed between higher living costs and lenders’ affordability checks. While lower rates help, the typical household still spends more than a third of their income on housing—a figure well above long-term norms.
Could government policy reshape the market this autumn?
If there’s one area that could jolt the market this month, it’s government policy. With the Autumn Budget approaching, a flurry of potential reforms has been floated, many of which could directly affect property owners.
One suggestion is a property wealth tax, with levies of 0.5% on high-value homes and 1% on agricultural or vacant land. Supporters say this would modernise an outdated council tax system, but critics warn it risks punishing homeowners and landlords.
Other ideas include subjecting rental income to National Insurance contributions, raising capital gains tax on homes worth over £1.5 million, or even phasing out Principal Private Residence Relief for expensive properties.
Even if only a fraction of these proposals make it into the Chancellor’s Budget, the ripple effects could be significant. Landlords might scale back their portfolios, rents could climb further, and high-value homeowners may rush to sell before new rules bite.
For now, the uncertainty alone is enough to unsettle the market.
So what can we expect in September?
September is shaping up to be a month of waiting. Interest rates are likely to remain unchanged, and while property prices may continue to drift, there’s no sign of a sharp correction. The real suspense lies in the political sphere.
If the Budget signals a lighter touch, confidence could rebuild gradually. Buyers who’ve been sitting on the fence may return, and sellers might feel more comfortable testing the market. But if sweeping new property taxes are announced, the reaction could be swift—particularly among investors and landlords, whose decisions often ripple through the wider market.
Longer-term outlook: where do we go from here?
Beyond September, the horizon looks clearer. Economists expect interest rates to continue easing into 2026, while real wage growth should strengthen as inflation finally retreats. Combined with Britain’s chronic housing shortage, that suggests prices are unlikely to fall dramatically and may even regain momentum from mid-2026.
London is likely to lead that recovery, but regional affordability advantages mean the North and Midlands could continue to see steadier demand. For those planning to buy, the coming year may represent a window of relative stability before the next cycle begins.
Final thoughts
This September feels like the market is catching its breath. Mortgage rates are moving in the right direction, but affordability is still tough. Prices are softening, but not collapsing. And policy decisions—rather than economics alone—look set to define the mood in the months ahead.
For buyers, sellers, and landlords alike, the key dates are 18 September, when the Bank of England makes its next rate call, and the Chancellor’s Autumn Budget. Together, they could set the tone not only for this autumn but for the housing market well into the next few years.
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Disclaimer:
This article is for general guidance purposes only and does not constitute legal, financial, or professional advice. Mortgage products and their terms can vary, and it is important to seek advice from a qualified, regulated professional who can assess your individual circumstances. Please ensure you consider your unique needs before making any financial decisions.
While every effort is made to ensure that the information provided on this blog is accurate and up-to-date, we do not guarantee its completeness or accuracy. The mortgage market can change rapidly, and the information on this blog may become outdated. We recommend verifying any information before acting on it and seeking tailored advice.
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