The UK housing market experienced a sharp upswing in early 2025, as buyers rushed to complete transactions ahead of changes to Stamp Duty in April, according to the latest Household Finance Review from UK Finance.
Mortgage lending soared in the first quarter, with completions by both first-time buyers and homemovers rising dramatically.
Between January and March, first-time buyer completions rose by 62% year-on-year to 107,000, while homemover completions increased by 74% to 94,450.
March was particularly buoyant, with first-time buyer completions up 113% and homemovers rising by 140% compared to the same month in 2024.
ACTIVITY COOLING
The surge was largely driven by efforts to take advantage of favourable stamp duty rates before the revised thresholds came into effect on 1 April. Early data for April indicates a natural cooling in activity following the rush.
Despite the spike in completions, affordability pressures remain a key concern.
First-time buyers, in particular, are opting for longer mortgage terms to manage monthly costs.
The average term for this group reached 31 years in March, compared with 28 years a decade ago, with an increasing number borrowing over 40 years – the maximum typically permitted by lenders.
Meanwhile, the proportion of income spent on mortgage payments remains high, with house price growth offsetting the benefits of lower interest rates.
REFINANCING ACTIVITY
Refinancing activity declined 13% in the quarter, in part due to fewer fixed-rate deals maturing. Product transfers still accounted for the majority of refinanced mortgages – around 80% – though this was slightly down from 83% a year earlier
Household savings also grew during the quarter, up 3% year-on-year. Deposits into notice accounts and cash ISAs rose by 10- and 11% respectively, with many consumers seeking to build precautionary savings amid ongoing economic uncertainty.
CHALLENGES REMAIN
Eric Leenders, Managing Director of Personal Finance at UK Finance, says: “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.”
