We are now starting to see the extent of how the shift back to the former stamp duty thresholds at the end of March fundamentally boosted the levels of purchase activity, with many people seeking to ensure they paid a lower amount of tax by completing prior to this.
This, of course, wasn’t just impactful on first-time buyers but it’s clear that a large number of new purchasers brought forward their transactions in order to make that tax saving.
Bank of England data shows that UK net mortgage borrowing increased to close to £13bn in March, the highest monthly increase since June 2021, while Lloyds Bank reported it completed a record 5,000 mortgages on March 27th alone. It also said it helped 20,000 first-time buyers in the first three months of the year.
What should also be obvious is that the level of activity seen during March was unlikely to be sustainable or present in April or May, and it may well be that we don’t see this level in any month during the rest of 2025. Again clarifying just how impactful such stamp duty shifts can be, and how Government is able to move the dial on housing activity should it wish to again.
I wouldn’t suggest we will see any stamp duty tax drops in the next year or so, but don’t be surprised if – as this Government gets closer to the next General Election date – it decides to throw another large stamp duty incentive rock in the water.
But, back to the here and now, and we perhaps see the activity drop-off in the latest Nationwide House Price Index, which actually showed a monthly drop in the average UK property price of 0.6% in April, compared to March.
This puts the average price at £270,752, and over the next few months that figure could dip slightly lower again, particularly if the drop-off from March is larger than anticipated.
For what it’s worth, and Nationwide appear to hold the same view, I think the softer market we clearly have right now, will begin to strengthen again as we move fully into summer. Although judging by the temperatures we are experiencing right now, we might already be in the UK summer.
Overall, I think there are a number of key fundamentals that will continue to drive greater levels of activity, not least low unemployment, growing incomes, plus of course the anticipation of further mortgage product rate falls, and the positive impact this will have on borrowers meeting affordability.
There is also good news for borrowers in terms of ongoing lender appetite, particularly for those seeking higher LTV mortgage products. As I hope you know, each month I use that Nationwide average house price figure to look at the number of 5% deposit mortgages available to first-time buyers in the UK.
Once again, I’m pleased to deliver positive news, with the number of 95% LTV products available up from 281 last month to 301 now.
That is close to a 25% increase in product numbers over the last two months alone, and perhaps shows how keen lenders are on this product space, particularly in order to incentivise those who may have either missed out on purchasing before the deadline, or who might otherwise be sitting on their hands right now.
While we have seen some notable shifts in product pricing in lower LTV bands, with many mainstream operators pushing below 4%, we’ve not seen such headline-grabbing moves in the 95% LTV space.
Within the variable/discounts/tracker space, Newbury’s three-year discount remains at 4.29%, plus it also has a fee-free option at 4.65%, while Progressive’s Northern Ireland-only two-year discount remains at 4.94% and, a new entrant to the top three, Furness, has a 4.99% two-year discount.
For fixes, in the two-year space, Newbury again has its 4.64% option, followed by Lloyds at 4.71% - that is a dip from last month’s 4.88% - and Monmouthshire has its 4.85% product. In five-year fixes, Progressive retains its Northern-Ireland only 4.65%, while Lloyds as a 4.75% deal, while Monmouthshire also offers the same rate.
What we can say is that this article has been written before this month’s MPC meeting, which is likely to result in a cut to Bank Base Rate of 0.25%, so I anticipate pricing across the board to reflect that when next I come to review the market.
Overall, therefore, we should have much to be positive about in the weeks and months ahead. Certainly, lenders appear to be much more active in the high LTV space, often using private mortgage insurance to get to market, and understanding that – even after a stamp duty incentive has disappeared – there are still plenty of borrowers requiring higher LTV products in order to get their feet on the ladder.
