Figures from Twenty7tec revealed that in the months after the stamp duty change, the share of first-time buyers who were looking for a 90% LTV mortgage and higher rose from 48.84% to 49.49%.
Further, the number of first-time buyer mortgage searches declined by 6.37% from just over a million in Q1 to 943,552 in Q2, suggesting that many tried to beat the stamp duty deadline.
Nathan Reilly, director at Twenty7tec, said: “This is a common occurrence when stamp duty rules change. Buyers accelerate plans to avoid paying more tax, and the market then cools as that upfront demand is met.
“What’s more concerning is that nearly half of first-time buyers are now relying on 90%+ LTV mortgages – a sign of how stretched affordability has become.
“While high-LTV products are nothing new, this level of reliance points to the mounting pressures buyers face when trying to get on the ladder.”
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Reilly added: “Yet, despite the dip in first-time buyer activity, total standard residential searches – which include movers and remortgagers – rose by 3.95%, from 4,167,357 in Q1 to 4,222,591 in Q2. The overall market remains strong, driven by those already on the property ladder, who appear unaffected by the stamp duty change.”
Further, the data showed that first-time buyer searches for homes worth more than £300,000 fell from 37.83% of activity in Q1 to 37% after the change, indicating that prospective homeowners adjusted their budgets to fit the new threshold.
All buyers face affordability pressures
Affordability constraints seemed evident across the board, as searches for mortgages at 90% LTV and above among all buyer types increased from 21.88% to 22.17%.
Borrowers also sought shorter-term deals, with mortgages for two years and fewer made up 46.5% of searches in Q2, compared to 41% in Q1. Twenty7tec suggested this could mean people expected interest rates to fall in the coming years.
Reilly said: “Stamp duty changes never happen in isolation. They ripple through the market, affecting behaviour, affordability, and product choice. Advisers will need to continue guiding clients through these shifts as policy and economic conditions evolve.”
