Facing a rise in stamp duty from 1 April as thresholds fell, March brought the highest volume of mortgage completions seen since September 2021, according to Barclays.
Among first-time buyers, the rise in completions was even higher, as the volume of mortgages advances jumped 70% compared to February.
As a result of rising stamp duty and bills such as energy and council tax, confidence in household finances and the housing market is lower than in previous months and aspirations of becoming a homeowner have fallen.
One in six (16%) now believe that buying a property is in reach within the next five years, down from 23% month-on-month.
Stamp duty barrier
From 1 April, the stamp duty threshold reverted to £125,000 from £250,000 for existing homeowners. First-time buyers, meanwhile, must now pay stamp duty on purchases of £300,000 or more. Previously, this threshold was set at £425,000.
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According to analysis by Leeds Building Society, the downwards shift in thresholds means that stamp duty tax will be higher for around 43,000 purchases in England.
With the new tax bands now in effect, a quarter of existing homeowners see stamp duty as the biggest barrier to buying their next home, rising to four in 10 among Generation Z – those in their 20s – according to Barclays’ survey results, which form its Property Insights data series.
Despite the rush of completions, many prospective first-time buyers have been delayed by the changes, with 14% reporting that the recent band adjustments have impacted their ability to buy a home.
Squeeze on household finance
Although rent and mortgage spending increased at a slower place in March – a year-on-year rise of 5.4% compared to a 7.7% increase in February – budgets remain stretched.
Housing costs, including rent or mortgage payments, council tax, energy and other bills, now make up 28% of income across the UK, rising to 36% among renters.
Some 73% say these expenses have risen in the last 12 months, averaging an extra £126 per month, or £1,516 per year. This is steepest for millennials, who span the ages of 28-43. Almost 70% said they were feeling the impact of hikes, at £191 per month or £2,286 per year. Utility bills accounted for the largest increase for nearly half of consumers, followed by council tax.
To combat price increases, 40% of households are adjusting their spending to afford their monthly housing costs.
Consequently, confidence in household finances dropped to 70% in March from 75% in February. Confidence in the UK housing market also fell slightly to 28% from 30%.
Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “For existing homeowners and renters, the shift in sentiment reflects the cautiousness felt across the economy as a whole, as consumers are concerned about rising bills and the prospect of global tariffs impacting their wallets.
“Housing consumes a significant portion of income, particularly for renters. With four in 10 adjusting their spending to meet their housing costs, it’s clear that the financial pressures of maintaining a home are intensifying at a time where people face a delicate balance between their essential spending and long-term financial goals.”
