On 15 July, the Chancellor, Rachel Reeves, unveiled a set of changes to the UK’s financial system. These reforms are designed to encourage investment, make it easier to buy a home, improve pension outcomes, and remove unnecessary red tape. While much of the detail will unfold in the coming months, the changes already announced could affect the way individuals borrow, save, and plan for the future.
Here are some of the key points explained in plain English, along with why they may matter to you.
Mortgages may become more accessible
One of the most eye-catching changes is a push to make mortgage lending more flexible. Some major lenders will now be allowed to offer larger loans, based on a higher multiple of your income. For example, someone on £30,000 a year might now be able to borrow more than before, making it easier to get on the housing ladder.
The income thresholds for special mortgage schemes are also being reduced, which could open up new opportunities for first-time buyers and those with modest earnings.
If you are thinking about buying your first home or moving to a larger property, this may be the right time to review your options with a mortgage adviser. With interest rates still relatively high, it is important to ensure that repayments remain affordable, even if you can borrow more.
A push to encourage long-term investing
The government wants to encourage people to put more of their savings into investments, rather than leaving everything in cash accounts. To support this, banks and building societies will be inviting savers to consider whether a stocks and shares ISA might be a better fit for their long-term goals.
If you are someone with money sitting in a cash ISA or savings account, now might be a good time to review whether it is earning a decent return. Over time, even small amounts invested sensibly in the stock market can grow much more than cash held at low interest rates.
You do not need to be an expert or take big risks. But talking to a financial adviser or reviewing your savings strategy with your accountant can help you make informed decisions.
Pensions under review
Another significant part of the reforms is the launch of a new review into pensions. This will look at whether people are saving enough, whether workplace pensions are working as they should, and how the system could be improved.
Although no immediate changes have been made, there could be shifts in the rules around auto-enrolment, pension contributions, or retirement ages in the near future. For the self-employed, this review may lead to new pension options being made available.
It is a sensible time to check in on your pension arrangements. Are you saving regularly? Do you know what your pension might be worth at retirement? Could you afford to contribute a little more each month?
Making finance simpler and more effective
The Chancellor also announced plans to cut back on complicated financial regulations. The idea is to free up banks to lend more, help businesses raise money more easily, and allow the financial sector to operate more efficiently.
While this may sound distant from everyday life, it could improve access to funding for small business owners, open up new investment options, or help keep the UK competitive in global finance.
What should you do now?
You do not need to act on everything immediately. But it is a good time to reflect on your own financial plans:
- If you are planning to buy a home, check if you may now qualify for a larger or more affordable mortgage.
- If you are saving in cash, consider whether part of that could be invested for better long-term returns.
- Review your pension contributions, especially if you have not looked at them in a while.
- Ask questions. Your accountant or financial adviser can explain how these changes might apply to your situation.
The new government has made it clear that change is coming. By staying informed and reviewing your plans now, you can make sure those changes work in your favour.
