Brokers navigate increased demand as buyers respond to tax deadline
A brief spike in higher-value mortgage lending occurred in March as borrowers moved to complete transactions ahead of changes to stamp duty, figures from Equifax UK’s Affordability Barometer have revealed.
According to data from the credit reference agency, average monthly repayments on new mortgages rose sharply, reaching a level 74% above the January 2022 baseline. This increase was short-lived, with repayments returning to a more stable trend of around 55% above the baseline for the remainder of 2025.
The changes to Stamp Duty, which took effect on April 1, reduced the tax-free threshold for first-time buyers in England and Northern Ireland from £425,000 to £300,000. The maximum property value eligible for relief also dropped from £625,000 to £500,000. For other buyers, the standard tax-free allowance was halved from £250,000 to £125,000.
Equifax UK reported that overall mortgage lending grew by 49% between February and March 2025. The most pronounced increases were in loan bands directly affected by the stamp duty revisions. Loans between £200,001 and £400,000, a range likely to include buyers seeking to avoid higher tax, rose by 69%. Lending in the £400,001 to £550,000 bracket increased by 93%, reflecting activity from first-time buyers facing potential tax rises of up to £11,250.
After the April deadline, new mortgage lending returned to levels similar to those seen in late 2024, with origination volumes stabilising through May and June.
For mortgage brokers, the temporary surge in high-value lending offered a short-term boost in business, particularly in the affected price bands. With lending volumes now stabilised, brokers should expect a return to typical market activity and continue to guide clients through affordability challenges and new tax thresholds.
“The first half of 2025 has been a period of adjustment for the UK mortgage market,” said Paul Heywood (pictured right), chief data and analytics officer at Equifax UK. “We’ve seen a clear reaction to policy changes, with the stamp duty deadline creating a temporary surge in activity and influencing the average value of new lending and repayments.
“Despite the data primarily reflecting a shift in the mortgage levels being taken out, rather than a fundamental rise in the cost of borrowing, baseline affordability challenges persist for many consumers and are perhaps compounded for those who sought to accelerate their purchase plans in order to benefit from the temporary stamp duty relief.
“Our data consistently shows that UK consumers are remarkably resilient, finding ways to manage their finances amid ongoing pressures. However, we must ensure that the right support and tools continue to be available to help everyone navigate their financial journeys effectively and make informed decisions for their long-term financial health.”
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