Nationwide reports a sharp drop in lending as buyers hit pause weeks earlier than usual, with advisers bracing for housing tax surprises
An unexpectedly early slowdown in mortgage demand is raising fresh concern among brokers, who say the market has shifted into “pause mode” weeks ahead of the usual pre-Christmas lull as borrowers wait to see whether the Chancellor targets housing taxes in this month’s Budget.
Nationwide’s latest half-year results underline the change in mood, with net mortgage lending falling to £4.7 billion in the six months to the end of September, down from £6.3 billion a year earlier. First-time buyer completions also dropped sharply - from 53,000 to 43,000 - reversing the rush seen ahead of April’s stamp duty deadline.
Even as some lenders have nudged fixed-rate pricing lower on the back of easing inflation, brokers report a market struggling to convert interest into applications. Many say the slowdown has arrived “several weeks earlier than normal”, driven less by affordability and more by political uncertainty.
Pete Mugleston, managing director of Online Mortgage Advisor, said enquiries had dipped noticeably sooner than expected, with many clients “cautious amid expectations of tax rises” and worried the government may revisit income tax, National Insurance or VAT.
He added that speculation over potential housing-related revenue measures was also weighing on sentiment, warning that the prospect of capital gains tax on main homes would be “hugely damaging” for stock levels, while any new NI charge on landlords would intensify pressures on smaller operators already squeezed by rising costs and regulation. Annual levies or modernised council tax bands, he argued, “do not penalise transactions”, but such reforms would offer little short-term budgetary relief and take time to implement.
The timing of the Budget is also shaping consumer behaviour. Gaurav Shukla, director at Home Me Mortgages, said many households were “mentally switching into Christmas mode much earlier than usual”, slowing enquiries among buyers already feeling the strain of higher living costs. With uncertainty over what the Budget might bring for tax, spending and the housing market, he said many clients preferred to delay big financial decisions until the new year. As a result, the final weeks of 2025 are becoming “less about chasing new enquiries and more about strengthening relationships with existing clients, reviewing plans for next year and preparing marketing strategies for a strong start to 2026.”
Nationwide’s figures also highlight persistent caution among smaller landlords, who face rising maintenance costs, stricter requirements and higher borrowing rates. Brokers warn that even the suggestion of further fiscal intervention could accelerate existing plans to exit the sector, further tightening rental supply.
Most advisers expect the market to remain subdued until the Chancellor delivers his statement. The sector now waits to see whether the Budget helps unlock activity, or cements this early slowdown into a much longer winter.
