A Budget built around breathing space
Chancellor John Healey’s first Budget on Wednesday 28th October 2026 offers households short-term help with energy and fuel bills, while leaving mortgage costs to the markets and the Bank of England. For homeowners and buyers the headlines are a new first-time buyer scheme, a £100 energy payment and higher tax on savings and rental income.
The backdrop matters. With war in the Middle East lifting energy prices, the Office for Budget Responsibility (OBR) now expects inflation of 3.1% this year and 3.4% in 2027, well above its March forecast.
The main announcements
The centrepiece is a one-off £100 Household Energy Payment for up to 20 million homes in council tax bands A to D in England, paid from January 2027. The electricity VAT cut is extended to 1 July 2027, taking around £50 off the Ofgem price cap in April 2027, and the government will ask Ofgem to scrap gas standing charges during 2027 or soon after. The Treasury says 60% of households will save an average of £45 a year, but heavy users will pay more. The BBC notes that typical bills are forecast to rise by around £400 to about £2,100 in January, so the £100 payment covers only a quarter of that.
Drivers get a six-month extension to the 5p fuel duty cut. The National Living Wage rises 3.9% to £13.21 an hour from April 2027, and the state pension rises by the same 3.9%. A new Warm Homes loans scheme will help households spread the cost of solar panels, batteries and heat pumps.
A temporary rise in the Bank Corporation Tax Surcharge from 3% to 6% for 15 months, raising around £1.5 billion, helps pay for this. From April 2027, tax rates on savings and property income rise to 24% for basic-rate, 44% for higher-rate and 49% for additional-rate taxpayers, about four points above today’s rates according to the BBC. The government says 84% of taxpayers will see no increase, and the planned cut to the £20,000 cash ISA limit has been dropped. The Treasury says the Budget rejects broad-based tax rises.
Housing, property tax and first-time buyers
Your First Home is the key housing measure, which the government says will help 70,000 people. Eligible first-time buyers in England can buy a participating new-build with a deposit as low as 2.5% and a government-backed equity loan of up to 20%, subject to income limits and local price caps. On a £300,000 home, that is a £7,500 deposit and a £60,000 loan.
A new First Time Buyer ISA, intended to replace the Lifetime ISA, will simplify deposit saving, and the Lifetime ISA withdrawal charge falls to 20% from today, helping buyers above the £450,000 price cap. The Budget also adds £1.5 billion for social and affordable housing and exempts smaller brownfield sites from Biodiversity Net Gain requirements.
From April 2027, property income tax rates rise to 24%, 44% and 49% for landlords letting in their own name. The High Value Council Tax Surcharge, announced in 2025, still starts in April 2028 for homes worth £2 million or more. We found no change to residential Stamp Duty rates in the government’s Budget summary or tax overview.
What the experts and politicians are saying
The OBR was sober. Chair Jonathan Haskel called the fiscal background “challenging”, and economist David Miles described household income prospects as a “pretty grim picture”, with virtually no growth in real disposable income per person since before Covid. It expects GDP growth of 1.2% this year and 1% next.
Politicians split along familiar lines. Conservative leader Kemi Badenoch called the Budget “not good enough, not strong enough, not bold enough” and said her party would scrap stamp duty and abolish inheritance tax on family homes. Liberal Democrat leader Ed Davey said it amounted to tinkering without a better trading relationship with Europe.
Dr Alexandros Skouralis of Henley Business School, writing before the Budget, argued that governments can influence but not control mortgage costs in the face of global shocks, and that scrapping stamp duty would cost around £9 billion a year and could simply lift prices where supply is tight.
What it means for homeowners and household budgets
The biggest pressure on homeowners is borrowing costs, not tax. The OBR expects Bank Rate to rise from 3.75% to around 4.25% by mid-2027, and the Bank’s decision on 5 November could bring a first move to 4%. Five-year fixes now average around 6%, against 2.55% in October 2021. Henley Business School estimates that on a £300,000 repayment mortgage with 25 years left, that is about £600 more a month, before fees. Nothing announced today directly lowers those rates.
Help for households is modest and aimed at running costs: the £100 payment, around £50 off the price cap, cheaper fuel and 3.9% rises in the minimum wage and state pension. The energy payment excludes council tax bands E and above, and the freeze on income tax thresholds continues, so pay rises can pull more income into higher tax bands.
Savers and landlords face higher tax from April 2027. The OBR warned that these measures, together with earlier changes, “collectively risk leading to a steady rise in rents”.
What this means if you are buying, moving or remortgaging
First-time buyers who can afford monthly payments but not a large deposit should look closely at Your First Home, remembering it covers only participating new-builds in England and a low deposit does not guarantee a cheaper purchase. Home movers see no change to Stamp Duty today.
If your fixed rate ends within the next year, plan early rather than waiting for the Budget to move the market. With higher rates expected, review your options well before your deal ends, using advice that covers the whole market.
At Grange Mortgages, we look at the whole market to find the right mortgage and protection for your circumstances, whether you are a first-time buyer, a home mover or approaching a remortgage. If today’s Budget has raised questions about your plans, get in touch for a no-obligation conversation.
This article is for general information only and is not personal advice. Your home may be repossessed if you do not keep up repayments on your mortgage.