27th October 2026
As households brace for the Budget, Rachel Springall, Finance Expert at Moneyfactscompare, highlights some of the key money challenges facing homebuyers, savers and retirees.
“Consumers must not make rash financial decisions on speculation alone, and instead, seek advice to go through the official announcements from the Budget. You can hardly blame consumers for anticipating the worst and making changes due to weeks of speculation, but they could come to regret their hasty choices.
“It is entirely possible for a Government to review existing pledges, yet, it has been made clear that the Budget must be built on fiscal discipline. With that in mind, we are expecting a restrained Budget, based on tight fiscal rules and a somewhat ‘low-key’ event, but consumers must not overlook any announcements. After the Budget has been delivered by the Chancellor, John Healey, there should be a clear roadmap created to confirm key changes and dates, which should encourage consumers to get advice for a financial review. There are already a few key changes ahead of Wednesday’s Budget that will impact homebuyers, savers and retirees.”
First-time buyers need more than deposit support
“Higher mortgage costs are creating a disastrous outlook for first-time buyers, particularly those with the smallest deposits who could pay almost an additional £150 more per month for a mortgage this year. The average mortgage repayment for a borrower with a 5% deposit has soared by £147 per month, or £1,764 per year, since November 2025. This is based on a £250,000 mortgage over 25 years, on the average two-year fixed mortgage rate at 95% loan-to-value, at 6.38% vs 5.41%.
“First-time buyers are facing their toughest affordability challenge since the Global Financial Crisis, with mortgage repayments accounting for around a quarter (22.6%) of gross income on average, according to UK Finance. Across the housing market, the average house price has risen to £273,000, according to the Office for National Statistics (ONS), yet price growth slowed for the fourth consecutive month. Slowing house price growth might look great to aspiring homeowners with small deposits, but if prices weaken significantly in the years ahead, it can leave them at risk of falling into negative equity.
“The Government’s new Your First Home scheme could provide some welcome support for prospective first-time buyers, but only those buying a new build home. The scheme also has restrictions which will need to be studied carefully. Buyers would still be wise to seek advice to better understand their buying power before the scheme launches, as they may be surprised to find out about more generous loan-to-income ratios. It will take time for more new homes to be built, to meet the Government’s ambitious target, with the third quarter of this year showing a 13% drop in new homes registered year-on-year, according to the National House Building Council. One scheme alone will not turn the market around, and improving affordability and housing supply will be vital if market conditions are to improve.”
Remortgage time bomb as millions due to refinance on higher rates
“Millions of borrowers are due to come off low-rate fixed mortgages in the coming months, yet many are stuck unable to secure a new product for when their current one expires. Despite the Government’s Mortgage Charter, not every lender will allow customers to lock in a new deal up to six months ahead of the end of a fixed rate deal. Despite this, the popularity of product transfers is evident, as the Financial Conduct Authority (FCA) revealed almost 900,000 mortgages between Q1 and Q2 2026 locked into a deal up to six months ahead of maturity. It would be beneficial for lenders to consider extending their product transfer window for those borrowers who have a shorter window than six months in light of interest rate volatility. Since November 2025, the typical mortgage repayment has climbed by £131 per month, or £1,572 per year. This is based on a £250,000 mortgage over 25 years, on the Moneyfacts Average New Mortgage Rate from 4.99% vs 5.87%.”
Pension inheritance tax reforms set to reshape estate planning
“Existing reforms are going to transform estate planning, such as the inclusion of unused pension pots in inheritance tax liabilities (IHT) from April 2027. These moves are making it even more essential for consumers to seek advice to ensure their tax and estate planning is all in order. If investing in a private pension, contributions do not automatically rise in line with inflation, so it’s essential to be proactive with contributions and regularly review any retirement goals alongside any Government rule changes on allowances or tax. A ‘lost’ private pension will be liable to IHT next year, and there are estimated to be three million lost pension pots in the UK containing approximately £18.7 billion in pension assets, according to the Pensions Policy Institute (PPI). Two-thirds of UK workers (66%) have at least one old workplace pension they’ve lost track of, according to Mylo from Aegon.
“Equity release business may have been subdued in recent months due to economic uncertainty and higher interest rates, but there is no denying it may start to boom from next year as consumers look at ways to reduce their estate wealth. If the Bank of England’s Monetary Policy Committee (MPC) provides more certainty surrounding interest rates next week, it could calm future rate pricing on loans, but even so, a lifetime mortgage will not be suitable for everyone as it’s not just about the rate charged. Over the past 10 years, the Moneyfacts average rate for a lifetime mortgage has climbed to 8.08%, up from 5.21%, with the pool of options rising and falling to accommodate changing demand. This is why good advice is invaluable, to ensure borrowers understand how equity release works. More than a third (36.1%) of brokers advised customers to wait before going ahead with equity release, according to the Equity Release Council.
“Another option for retirees to move money out of an estate could be to take out an annuity, but it entirely depends on the set up. Since March 2026, the average annual annuity income has grown by £178, up from £3,547 to £3,725, based on an annuitant aged 65 buying a standard single life level without guarantee annuity for a £50,000 purchase price.”
Savers face a triple hit from fiscal drag, tax rises and ISA reform
“Savers may be frustrated about the increasing complexities surrounding ISAs alongside relentless fiscal drag and higher taxation on their hard-earned cash. There are less than six months left for savers to utilise their 2026/27 Cash ISA allowance before changes take effect from 6 April 2027. Uninvested cash in a Stocks & Shares ISA will be taxed at 22%, up by 2% at the basic rate, under-65s will no longer be able to transfer from a Stocks & Shares ISA into a Cash ISA, and savers will no longer be able to hold 100% of their portfolio in money market funds. This is also the last tax year (2026/27) to use up the full £20,000 Cash ISA allowance for those aged under 65, with rules also changing from 6 April 2027 to reduce the limit to £12,000.
“The stealth tax of freezing income tax thresholds until 2031 means many consumers are being dragged into higher rate tax bands, and with no signs of review, it means thresholds will have been in place for almost a decade. Savers are going to be dismayed by fiscal drag, as any basic-rate taxpayer who moves up to the higher-rate tax bracket will see their Personal Savings Allowance (PSA) halved, from £1,000 of savings interest tax-free each year to just £500. Worth also noting, that it has been 10 years since the PSA was introduced, and it has not moved with the times. Due to higher interest rates, even savers with a house deposit can now breach their allowance if it is not sitting within an ISA wrapper.
“Tax on savings income outside of an ISA wrapper is increasing by 2% across all bands from April 2027. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027. It’s estimated by HMRC that 3.8 million people, with savings income above the relevant tax-free allowances, equivalent to 9% of taxpayers, will pay more tax on their savings income by 2029-30. This highlights the growing tax burden for savers, so seeking advice to utilise any allowances to shelter savings from tax is vital.”
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