Santander UK has reported a sharp rise in mortgage applications, with a 130% increase in the fourth quarter of 2024 compared to the same period in 2023. The surge comes as homebuyers rush to take advantage of the Government’s stamp duty holiday before new thresholds take effect on April 1, 2025.
With the bank estimating that property purchases take an average of four months from mortgage offer to completion, those securing a mortgage before the end of 2024 have maximized their chances of benefiting from lower stamp duty costs before the deadline.
Under the new rules, the stamp duty nil-rate threshold for first-time buyers will be reduced from £425,000 to £300,000. For all other buyers, the threshold will drop from £250,000 to £125,000. As a result, a first-time buyer purchasing a home priced between £300,000 and £500,000 will face a 5% stamp duty charge on an additional £125,000, adding thousands to the overall cost. Other buyers will pay 2% on amounts between £125,000 and £250,000, leading to a potential extra cost of up to £2,500.
Commenting on the increase in applications, Graham Sellar, Head of Intermediary Channel – Mortgages at Santander, said: “We all know that buying a home – whether it’s our first or our forever home – comes with significant costs. Every penny counts when considering things like legal fees and moving costs, so it’s great to see so many people making the most of the holiday and securing their new home ahead of April.”
First-time buyers are expected to face the steepest increase in costs under the revised stamp duty rules. In the South East, where the average house price is £385,600, buyers could save up to £4,280 by purchasing before April 1. In London, where average house prices stand at £535,700, the cost increase could reach £11,250, as buyers of properties over £500,000 will face the same stamp duty rates as next-time buyers.
Stamp Duty Changes for First-Time Buyers:
| Region | Average Price | Stamp Duty Before April 1 | Stamp Duty After April 1 |
|---|---|---|---|
| South-East | £385,600 | Nil | £4,280 |
| London | £535,700 | £5,535 | £16,785 |
Recent research by Santander highlights how first-time buyers are adapting to rising costs by compromising on location. Two-thirds (67%) of Britons who bought their first home in the past two years had never visited their new neighbourhood before purchasing, compared to just over half (51%) of those who bought more than five years ago. The data suggests that first-time buyers relocating to unfamiliar areas saved an average of £29,000 compared to purchasing in their previous location.
With the April 1 deadline fast approaching, the scramble to secure mortgages and complete purchases before the new rules take effect is set to continue.