Cash incentives if you missed stamp duty deadline – and everything else to know about mortgage market this week
Every Friday, we take an overview of the mortgage market with industry experts and round up the best rates with the guys from Moneyfactscompare.
This week saw major changes to stamp duty, which buyers had been scrambling to avoid.
From Tuesday, first-time buyers started paying stamp duty on the value of homes above £300,000, down from £425,000, while other movers saw this “nil rate” halve from £250,000 to £125,000. The reduced rate had been a temporary measure introduced during the cost of living crisis.
The return to normal means many more buyers are liable to pay the tax, leaving them between £2,500 and £11,250 worse off.
Why more lenders could start offering lucrative incentives
Some lenders are offering lucrative cashback incentives to buyers who missed the stamp duty deadline.
For example, as we reported last Friday, Yorkshire Building Society was offering first-time buyers up to £6,250 cashback, and Nottingham Building Society was offering up to £5,000.
We also brought you news earlier this week that Santander eased its borrowing rules to approve mortgages for people who previously wouldn’t have passed their stress tests.
Some experts, like Coreco managing director Andrew Montlake, predict other lenders are likely to follow in their footsteps.
Prominent lenders have also cut their fixed rate mortgages this week, including Lloyds Bank (by up to 0.16%), Halifax (also 0.16%), Virgin Money (0.15%), Santander (0.15%), NatWest (0.10%) and Royal Bank of Scotland (0.10%).
This downward trend is in response to falling swap rates (which dictate how much it costs lenders to lend).
Warning for fixed-rate remortgagers
Borrowers looking to remortgage this year on five-year fixed deals will find the average rate is much higher than it was when they first signed in April 2020, as it has almost doubled from 2.66% to 5.18% during that period.
“Fixed rates are trickling on a downward trajectory. Despite this, borrowers preparing to remortgage off their five-year deal in the coming weeks should brace themselves for a sharp rise in monthly repayments,” Caitlyn Eastell from Moneyfacts said.
According to the most recent LMS monthly remortgage snapshot, 62% of borrowers saw an increase in their monthly repayments in February – an average of £294.
“The Bank of England base rate is projected to fall further before the year is up, which will come as positive news for borrowers who have a bit longer left on their existing deal,” Eastell added.
Second quarter of 2025 ‘should be exciting’
It’s been a relatively busy start to the year. Before the stamp duty deadline, demand dropped – but by no means fell off a cliff.
Net mortgage approvals for house purchases decreased by 600 to 65,500 last month.
Looking ahead, one spanner in the works is the inflationary effects of April price hikes and tax changes, which may disincentivise the Bank of England from making any rate cuts in May.
Nonetheless, some are optimistic about the market, like Mike Staton, director at Staton Mortgages, who told Newspage: “The second quarter of 2025 should be an exciting one as many lenders are starting to look comfortable, rate drops are expected to continue and there is an acceptance from buyers that the market is what it is.”
Buy-to-let staging comeback – but ‘not without casualties’
There is also reason for optimism in the buy-to-let market, where there was a 39% rise in loans in the fourth quarter of last year compared to the same period in 2023, the latest figures show.
“The buy-to-let market is staging quite the comeback,” said Sean Horton, managing director at Respect Mortgages.
Harps Garcha, director at Brooklyns Financial, explained rent increases, combined with a slight reduction in interest rates, have eased some of the pressure on landlords.
“But it’s not all good news,” said Charwin Mortgages director Ranald Mitchell.
“Possessions are up nearly 30% year-on-year, exposing the cracks for landlords stuck on older, unaffordable deals. It’s a market split between the bold and the broken. This comeback is not without casualties.”
There were 700 buy-to-let mortgage possessions taken in the last quarter of 2024.
Garcha added: “Challenges remain, particularly with the looming introduction of the Renters Reform Bill.”
The bill, which is currently being scrutinised in the House of Lords, provides better protections for renters by banning no-fault evictions, setting up an appeals process for excessive rents, and giving tenants more time to move if the landlord decides to move in or sell up.
Steady rise in house prices
The cost of houses on the market steadily rose at 3.9% last month, unchanged from February.
That puts the price of the average home at £271,316, up from £270,493.
The biggest jump was in Northern Ireland, where annual price growth accelerated to 13.5%.
On the other end of the scale was London, which saw a 1.9% year-on-year rise.
Nationwide’s chief economist Robert Gardner expected activity to remain “a little soft” in the coming months, after buyers had clamoured to complete before the stamp duty changes on 1 April.
