UK Financial News This Week: Budget Countdown, Rising Mortgage Rates and Pensions Under Pressure

Posted by: Tom Whiting
Category: Business plans

If you usually want one clear answer from the week’s financial news, it is this: do not make a major financial decision purely because of a Budget rumour or a short-term market headline.

The Chancellor’s Budget is due on 28 October 2026, now only around a month away. That uncertainty is influencing mortgage pricing, pension withdrawals, tax planning and household confidence.

For individuals, families and business owners across Bolton, Greater Manchester and the wider UK, the sensible approach is to understand what is changing, identify what needs attention now and avoid rushing into decisions that could affect you for many years.

The Budget countdown is shaping almost every financial story

The Budget is the central theme this week.

There is growing discussion about:

Bank taxation and the possible impact on mortgage and savings rates
Pension tax and inheritance tax planning
Capital Gains Tax
First-time buyer support
Savings and investment allowances
Business taxation and cash-flow planning

However, speculation is not the same as confirmed policy.

Decisions made simply to get ahead of a rumoured Budget change are often the wrong decisions. A pension withdrawal, property purchase, investment sale or company restructuring should make sense for your wider plan, not just for one possible announcement.

We take the time to look at the longer-term position, explain the options in plain English and show how different decisions could affect your future finances.

“Honesty, simplicity and clarity were exactly what we needed.” client feedback shared with Thomas Whiting Ltd

Mortgage rates are rising even though Bank Rate has not changed

The Bank of England’s Monetary Policy Committee voted 6–3 on 16 September to keep Bank Rate at 3.75%. Three members wanted an increase to 4%.

Inflation reached 3.1% in August. The Bank expects it to rise to around 3.75% in the final quarter of 2026 and potentially above 4% in early 2027, partly because of energy price volatility linked to conflict in the Middle East.

That has led the Bank to warn that further increases may still be needed.

At the same time, mortgage rates have already been moving higher. The average two-year fixed-rate mortgage is around 5.67%, up from approximately 5.59% earlier this month. First-time buyers are commonly seeing rates in the upper-5% to low-6% range.

Why can fixed mortgage rates rise when Bank Rate is unchanged?

This is one of the most useful points to understand this week.

Bank Rate is the interest rate set by the Bank of England. A fixed mortgage rate is priced by lenders using wider market expectations, including the cost of borrowing money for the next two or five years.

Those costs are reflected in wholesale “swap” rates.

In simple terms:

Bank Rate is today’s reference point.
Swap rates reflect what financial markets expect to happen in the future.
Lenders use those future expectations when pricing fixed mortgage deals.
If markets expect higher inflation or future Bank Rate increases, fixed mortgage rates can rise immediately.

It is similar to booking a hotel room months ahead. The price is not based only on today’s room rate; it also reflects expected demand and future costs.

UK Finance has warned about further bank taxes

UK Finance has written to the Chancellor warning that further increases in bank-specific taxes, or changes to the interest banks receive on their Bank of England reserves, could increase mortgage and savings rates and reduce lending capacity.

Its figures suggest that a typical corporate and investment bank in London faces a total tax rate of:

46.5% in London
42.2% in Amsterdam
39.1% in Frankfurt
27.9% in New York

UK Finance is also calling for:

The proposed First-Time Buyer ISA to be taken forward
Faster and cheaper home buying
Better sharing of property information
Continued support for lending outside London

It reported £176.6 billion of new residential house-purchase lending in 2025, with 83% taking place outside Greater London. The number of first-time buyers helped onto the housing ladder rose to 391,000, up from 332,000 in 2024.

North West housing and mortgage planning illustration

What this means for you

If your mortgage deal ends within the next six months, do not wait until the final few weeks.

A broker or adviser may be able to:

Review a product transfer with your existing lender
Compare alternative lenders
Secure a rate in advance where available
Check whether overpayments or a different term could help
Explain the difference between fixed, tracker and variable options

You can read more about our mortgage journey or contact us to discuss your circumstances.

Pension withdrawals have risen sharply

New FCA data shows that £91.2 billion was withdrawn from pension pots accessed for the first time during 2025/26.

That is:

22% higher than the previous year’s £75 billion
70% higher than £53.6 billion in 2023/24
Much faster growth than the number of pots being accessed

The number of pension pots accessed for the first time rose by 7% to just over 1.04 million. This suggests that people are not simply accessing pensions in greater numbers. They are also withdrawing materially larger amounts.

One reason appears to be concern about future inheritance tax changes.

From 6 April 2027, most unused pension funds and pension death benefits will be brought into the value of a person’s estate for inheritance tax purposes. The changes were legislated for in the Finance Act 2026.

The rules will involve:

Personal representatives reporting and paying any inheritance tax due
Scheme administrators providing information
Withholding notices allowing administrators to retain up to 50% of benefits
A Pensions Direct Payment Scheme allowing administrators to pay HMRC directly

Death-in-service benefits remain exempt.

Be careful about sequencing risk

Some people may be tempted to withdraw pension money now to try to avoid the future tax treatment. That may be appropriate in particular circumstances, but it is not automatically the right answer.

Taking money from a pension can:

Create an income tax liability
Reduce the fund available to provide retirement income
Affect future tax allowances
Change how investments are held
Expose you to poor investment timing
Damage a retirement plan designed to last 10, 20 or more years

This is known as sequencing risk: the order and timing of withdrawals and investment returns can have a major effect on how long your money lasts.

AJ Bell analysis also found that the average age at which women leave the labour market reached a record 65.1 in 2026, up from 64.7 in 2025. Later working lives may mean people have longer to build savings, but they can also compress the time available to prepare carefully for retirement.

Before taking a large pension withdrawal, consider the full plan rather than just the possible tax change.

Our pension and retirement calculator can provide a starting point, but personal advice is important where large sums or inheritance tax planning are involved.

Tax uncertainty is making long-term planning harder

HMRC inheritance tax underpayment has reportedly risen by 14% as data scrutiny increases.

Separately, the Investment Association has urged the Chancellor to give savers more long-term certainty on pension taxation and avoid further Capital Gains Tax increases. Its research found that 38% of people believe changing pension policy makes it harder to plan for the future.

The message is understandable: retirement planning works best when people can make decisions over decades, not react to a new rumour every few months.

That does not mean ignoring tax planning. It means reviewing:

Pension contributions
ISA use
Investment ownership
Estate planning
Business and personal assets
The likely timing of future withdrawals

The aim should be to use available allowances sensibly while keeping the overall plan flexible.

Your First Home scheme: helpful, but not free money

The Government announced the proposed Your First Home scheme on 26 September. It is expected to support first-time buyers in England purchasing new-build homes from participating developers.

The proposed structure includes:

A deposit of 2.5%
A government-backed equity loan of 20%
An initial interest-free period
Household income caps
Local property price caps

Full eligibility rules, costs and implementation dates are expected to be confirmed at the Budget.

The scheme could help people who are mainly held back by the size of their deposit. However, buyers should still consider:

Whether the new-build price represents good value
The eventual repayment of the government equity loan
How changes in the property value could affect the amount owed
Future mortgage affordability
Service charges, estate charges and build quality
Whether waiting for more details is sensible

Bolton and North West housing: affordability remains an advantage

Local affordability is still a genuine positive for Bolton and much of the North West.

The latest ONS figures put the average Bolton house price at around £203,000–£204,000, with first-time buyers paying approximately £178,000–£180,000, depending on the update period used. Rightmove also reported asking prices rising by 0.7% nationally in September.

Around 71% of homes in the North West are finding buyers, helped by lower average prices than in the South East.

But affordability is not just the purchase price. It is also the monthly payment.

Before starting viewings, understand:

The mortgage amount you may be able to borrow
The likely monthly payment at different rates
The effect of a larger deposit
Council tax, insurance and maintenance costs
How much emergency cash you should retain

Our mortgage calculator and comparison service can help you start that conversation.

Savings rates are attractive, particularly for business cash

Fixed-rate savings accounts are paying some of the highest rates seen in years. Deals around 5.25% are being discussed, although the best rate depends on the term, provider, deposit size and access conditions.

With inflation at 3.1%, a competitive savings rate may provide a useful return on cash that would otherwise sit in a low-interest account.

For individuals, consider:

Keeping an accessible emergency fund
Using available ISA allowances
Checking whether a fixed term suits your plans
Spreading deposits across providers where appropriate
Confirming Financial Services Compensation Scheme protection

For business owners, it may be worth reviewing surplus cash and deciding how much should remain available for:

Tax bills
Payroll
Supplier payments
Unexpected costs
Planned investment
A wider business cash buffer

Do not lock away money that the business may need soon. The right balance is usually a combination of accessible cash and appropriately timed fixed-rate deposits.

What to do this week

For individuals and families

Check your mortgage deal end date. If it is within six months, start reviewing options now.
Avoid acting on Budget rumours. Write down the decision you are considering and the long-term reason for it.
Review pension withdrawals carefully. Tax planning should not undermine a sustainable retirement income.
Check your cash savings rate. Make sure your emergency fund remains accessible.
If buying your first home, get an affordability review before viewing properties.
Use ISAs and pension contributions as part of a plan, not in isolation.

For business owners

Review your company cash reserves and upcoming tax liabilities.
Consider whether surplus cash could earn a better rate without compromising access.
Review director pension contributions before the Budget, but do not act purely on speculation.
Stress-test mortgage, borrowing and energy costs.
Avoid structural changes to the company until you understand the confirmed rules.
Keep personal, business and retirement planning connected.

At Thomas Whiting Ltd, we provide independent financial advice for individuals, families and business owners across the UK. We are FCA-authorised and regulated, and offer advice remotely or face to face from our Bolton base.

Any recommendation will be explained clearly, including whether the advice is independent or restricted and what fees apply. Contact us if you would like to discuss your position.

Important risk warning

This article is for general information only and is not personal financial advice. The value of investments can fall as well as rise, and you may get back less than you invest. Past performance is not a reliable indicator of future results. Pension and tax rules can change, and tax treatment depends on your individual circumstances. Mortgage products, interest rates and eligibility vary between lenders. Your home may be repossessed if you do not keep up repayments on your mortgage.

Thomas Whiting Ltd is authorised and regulated by the Financial Conduct Authority.