Budget 2024: What does it mean for your mortgage and savings?

The Chancellor has stated that Labour inherited "the worst set of circumstances since the Second World War" regarding Government finances, a claim disputed by the Conservatives.

Despite pledging "no return to austerity", Reeves suggests that most of the financial gap will likely be filled by tax increases rather than spending reductions.

How has the Budget affected your savings?

Recent data shows a significant increase in savings, particularly in cash ISAs. Britons deposited £3.9bn into cash ISAs in September, bringing the total since April to £31.8bn.

Sarah Coles, head of personal finance at Hargreaves Lansdown said: "Worries about potential tax rises in the Budget have drawn savers to cash ISAs in huge numbers, attracting £31.8bn since April. There was no let up in September and another £3.9bn of savings was protected from tax.

Overall deposits in banks and building societies rose by £8.2bn in September, with £3.4bn going into interest-bearing easy-access accounts.

Coles added that the prospect of frozen income tax thresholds has heightened concerns about potential savings tax bills.

She said: "So much talk about bigger tax bills has focused people’s minds on the savings they can make with the cash ISA.

"At the same time, the prospect of income tax thresholds potentially being frozen for longer means more people moving into higher tax brackets, so savers are worried that could be hit with a tax bill on their savings."

More people have begun saving into fixed interest accounts as banks have started to contact savers, warning of rate cuts on the cards.

Coles continued: "The fact that the easy access market remains so competitive means it’s still the bridesmaid, but flows have turned positive after falling a month earlier.

"The pendulum may have swung back when we get the figures for October. The banks are increasingly focused on raising deposits through easy access accounts, which protects them from interest rate risks if the Budget has an inflationary sting in its tail.

"It means more competition and rate rises across easy access products in HL's Cash ISA and Active Savings platform in October."

How has the Budget affected mortgages?

The mortgage market has seen positive trends, with approvals for house purchases rising to 65,600 in September, the highest since August 2022. Remortgaging approvals also increased by 3,100 to 30,800.

Coles said: "Mortgage approvals are still looking rosy, as falling rates are putting a spring in the step of buyers."

The average rate on new mortgages fell eight basis points to 4.76 per cent in September.

The finance expert explained that this drop has provided relief for those facing remortgages as someone with a £200,000 loan, remortgaging for 20 years on 6.5 per cent, would face monthly repayments of £1,491, whereas after a fall to 5.4 per cent it would drop to £1,365 saving £126 a month.

Given that the HL Savings & Resilience Barometer shows that only 57 per cent of mortgage holders have enough cash left at the end of the month to be resilient, this kind of wiggle room could make all the difference, Coles explained.

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The upcoming Budget has implications for the property market, particularly for landlords. According to Zoopla data, about 12 per cent of properties currently for sale were previously rented out.

Coles said: "The Budget has played a significant role here, and helped persuade even more landlords to sell up, to try to shift property before capital gains taxes can rise."

She added: "Buyer demand has pushed up sales rather than prices, because there's plenty of property up for sale."

The potential changes in capital gains tax are prompting landlords to act quickly, potentially reshaping the rental market landscape.