Stamp duty deadline fuels early-year boom
Mortgage lending in the UK spiked during the first quarter of 2025, as homebuyers moved to complete purchases before changes to stamp duty took effect in April, according to new data from UK Finance.
The figures show that mortgage completions saw a notable jump year over year, particularly among first-time buyers and homemovers. First-time buyer completions reached 107,000 in Q1, a 62% rise from the same period in 2024. Homemover completions totalled 94,450, marking a 74% increase.
March saw the steepest rise, with first-time buyer completions up 113% year-on-year, while homemover completions jumped 140%, reflecting the urgency among buyers to beat the 1 April deadline for the stamp duty adjustments.
Despite the increase in activity, early indicators from April suggest demand has tapered following the rule change. Separate figures released by the Bank of England show a sharp drop in overall lending activity for the month.
Affordability continues to weigh on borrowers, as UK Finance noted that more buyers are taking out longer-term loans to keep monthly payments manageable. In March, the average mortgage term for first-time buyers reached 31 years, up from 28 years a decade ago. Much of this increase has been driven by a rise in 40-year term products, typically the upper limit under most lenders’ criteria.
While interest rates have eased somewhat, rising house prices have kept overall mortgage affordability stretched. The share of income that first-time buyers spend on mortgage repayments remains elevated.
“We saw a significant rise in mortgage activity in the first quarter as households moved quickly to take advantage of lower stamp duty rates,” said Eric Leenders (pictured left), managing director of personal finance at UK Finance. “While these are signs of growing financial resilience, the challenges many households face, particularly around affordability, remain.”
Toby Leek (pictured right), president of NAEA Propertymark President, echoed Leenders’s observation. “The increase in stamp duty thresholds sparked a flurry of mortgage lending in the first quarter of 2025 due to people rushing to avoid paying higher rates of Stamp Duty across England and Northern Ireland and before thresholds changed at the start of April.
“While this has a positive effect on the mortgage market within the first quarter of the year, it was always inevitable there would be a post threshold slow down as an aftereffect.”
“As we head into the summer months, it remains a case of all eyes on the Bank of England regarding the directions of travel on the base rate over the coming months and how this might translate into lenders bringing potentially more competitive mortgage products to the market.”
On the refinancing side, UK Finance said activity declined 13% during the first quarter. This was attributed to a smaller pool of maturing fixed rate mortgages. Although product transfers continued to dominate the refinancing market — accounting for eight in 10 refinanced loans — the share was slightly lower than the 83% recorded in Q1 2024.
Looking ahead, around 1.6 million fixed rate mortgages are set to mature over the course of the year, signalling potential shifts in borrowing patterns.
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