Housing Market Surges as Stamp Duty Changes Drive Buyer Activity
UK Finance today releases its latest Household Finance Review for Q1 2025, which explores trends in household spending, saving, and borrowing.
- Mortgage lending surged in the first quarter of 2025, driven by homebuyers seeking to complete purchases before changes to Stamp Duty took effect in April.
- Household savings continued to grow, particularly in notice accounts and cash ISAs.
Mortgage Lending
Mortgage completions rose sharply in the first quarter of 2025 as both first-time buyers and homemovers sought to complete transactions to benefit from lower Stamp Duty rates before changes took effect on 1 April.
For the quarter as a whole, first-time buyer completions increased 62 per cent year-on-year and homemover completions increased by 74 per cent.
Quarterly first time buyer and homemover completion numbers:
| First time buyers | Homemovers | |
| Q1 2024 | 66,250 | 54,640 |
| Q1 2025 | 107,000 | 94,450 |
| Year on year change | + 62 per cent | + 74 per cent |
There were notable peaks in March, with the number of first-time buyer and homemover completions increasing by 113 per cent and 140 per cent respectively compared with March 2024.
March first time buyer and homemover completion numbers:
| First time buyers | Homemovers | |
| March 2024 | 24,070 | 19,720 |
| March 2025 | 51,180 | 47,360 |
| Year on year change | + 113 per cent | + 140 per cent |
Early data for April suggests a natural cooling of activity following the rush to secure lower Stamp Duty rates.
Despite this surge, affordability remains stretched. Borrowers continue to take longer mortgage terms to help manage affordability pressures, especially first-time buyers. The average first-time buyer mortgage term is now 31 years as of March, compared with 28 years in March 2015. The increase in the average term has been driven primarily by a significant increase in borrowing over a 40-year period, typically the maximum allowed under lenders’ policies.
The amount spent by first time buyers on mortgage payments relative to their income is also high. Even as interest rates have come down, this measure of affordability has not eased significantly, with rising house prices largely offsetting any lowering of payments through falling rates.
Remortgaging and Refinancing
We are starting to see a modest shift away from product transfers and towards more external remortgaging.
Refinancing activity declined by 13 per cent in Q1, largely due to fewer fixed-rate deals maturing early in the year. During the quarter eight out of ten mortgages that were refinanced were done via a product transfer, which is higher than long-term averages, but lower than 83 per cent in Q1 2024.
In total, around 1.6 million fixed rates mortgages are due to expire in 2025 as a whole.
Savings Trends
The total amount of household savings increased in Q1, up three per cent compared with March 2024. Recent Bank of England data suggests more households are building precautionary savings, likely in response to economic uncertainty.
Growth was concentrated in notice accounts and cash ISAs. The amounts deposited in these types of accounts increased by 10 and 11 per cent respectively during the quarter.
Eric Leenders, Managing Director of Personal Finance, said:
“We saw a significant rise in mortgage activity in the first quarter as households moved quickly to take advantage of lower Stamp Duty rates. Savings also continue to build, with consumers increasingly favouring notice accounts and ISAs. As discussions around cash ISA reforms continue, it remains clear that many savers continue to favour them as a reliable means to build and protect their savings.
“While these are signs of growing financial resilience, the challenges many households face, particularly around affordability, remain. Anyone worried about their mortgage or financial situation should speak to their lender early to explore the support available.”
Toby Leek, NAEA Propertymark President, comments:
“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.”
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