Almost half of FTBs choose 90%+ mortgages due to stamp duty changes: Twenty7tec – Mortgage Strategy
Twenty7tec revealed that nearly half of first-time home buyers choose 90% of loan-to-value mortgages (LTV) mortgages effective April 1.
First-time home buyers did not pay stamp duty on homes up to £425,000 until April 1, 2025, but the threshold for NIL interest rates has been lowered to £300,000 since April.
The current purchase fee ranges from £300,001 to £500,000 is 5% charge, with the removal of relief completely exceeding £500,000, which is below the previous £625,000 cap.
Since these changes, 90%+ LTV borrowing in FTB has increased from 48.84% to 49.49%, and nearly half now rely on high LTV mortgages to climb the ladder.
The data found that search volumes fell 6.37%, from 1,007,752 in Q1 to 943,554 in Q2, which could indicate many trends, with many rushing to complete purchases before the stamp duty changes take effect.
The latest figures also show that the proportion of FTB searches for homes exceeding £300,000, down from 37.83% in Q1 to the latter 37%.
Overall 90%+ LTV borrowing rose from 21.88% to 22.17%, and the company said more buyers are expanding their deposits due to burden pressure.
Meanwhile, the proportion of mortgage searches for transactions under two years rose from 41% in Q1 to 46.5% in Q2.
“This is a common situation when stamp duty rules are changed. Buyers accelerate plans to avoid paying more taxes, and then meet expected demands,” said Nathan Reilly, director of Twenty7TEC.
“It is even more worrying that nearly half of first-time home buyers now rely on 90%+ loans to value mortgages, which shows how stretchable the affordability has become.
“While high LTV products are nothing new, this level of dependence points to the pressure buyers face when trying to climb the ladder.”
“However, despite the decline in first-time buyer activity, total standard residential searches (including promoters and Reynaults) grew 3.95%, from 4,167,357 in Q1 from 4,167,357 to 4,222,591 in Q2. The overall market remains strong, driven by unpopular real estate markets that appear to be unavailable to postal obligations.”
