March is clearly going to be an eventful month in terms of property transactions, as the entire industry attempts to get as many completions as possible through before the change of stamp duty thresholds at the start of April.
There has been a lot of focus on first-time buyers in this respect, but we should also not forget there are repercussions for a large number of existing homeowners as well all seeking to make a stamp duty saving before the thresholds return to their previous levels.
Understandably, however, there will be a level of nervousness from first-timers given that a) they’ve never been through this process before, and b) they are likely to be reliant on professions they have never used before, plus at the start of a chain that may have multiple links that can break.
Without wanting to be too doom-laden, there will be those that simply don’t make the deadline date. According to recent research out of Rightmove, as many as 25,000 first-time buyers, currently going through the process, are going to miss the deadline, which would result in a collective £34 million in extra stamp duty payments should their completion not happen until April or beyond.
It is perhaps no wonder so many of our clients are seeking to complete before the deadline, and while it will be conveyancing firms who are likely to be feeling the pressure most, other stakeholders, notably advisers, are going to be under the cosh in terms of their clients wanting to know where they are and whether this is achievable.
Of course, we as an industry have been here many times before, certainly over the last couple of decades, with multiple holidays – and therefore deadlines – to deal with. It’s at this stage when you might wonder whether it is all worth it?
Clearly, there will be a front-loading of transactions through the first quarter of 2025, and we await to see what the overall impact will be on activity post-31st March. Will there be a massive drop-off in first-time buyer activity, or is demand strong enough for individuals not to worry too much about the stamp duty costs? I expect the answer will be somewhere in between.
What we will need to continue however is a strong, and growing, supply of high LTV mortgage products because clearly extra stamp duty costs are going to eat into the amount of money potential first-timers can save for their deposits.
It may make the difference between being able to put down 10% or just having 5%, and if the latter then they need to access 95% LTV mortgages in order to support their purchase.
Each month, I look at the number of high LTV mortgage products available, based on Nationwide’s average house price, which in February was £270,493, meaning a purchaser would need a 5% deposit of £13,525.
There is further good news this month as product numbers have continued to tick upwards, this time moving from 252 at the start of February to 257 at the start of March, with the split being 231 fixed-rate products and 26 trackers/discounts/variables.
With the Bank of England cutting Bank Base Rate (BBR) last month, as anticipated we have seen some rate cuts in the latter product space. Newbury’s three-year discount has dropped from 4.85% to 4.65%, while Progressive’s Northern Ireland-only two-year discount is available at 4.94% and the Loughborough continues to offer a 5.15% three-year discount product.
For fixes, Lloyd’s has made an entry into both the two and five-year product space, but with mortgages only available to its current account customers – 5.09% and 4.88%, respectively.
Otherwise, in the two-year space we have Progressive with a 5.13% product, Scottish with a 5.14% offering, while both the Newbury and Loughborough offer 5.19% deals. In the five-year sector, we also have Progressive – 4.65% - and Scottish – 4.89% - while again the Newbury is there with its 4.99%.
Interestingly, not all lenders have chosen to cut pricing by the same amount that the Bank of England cut BBR – 25 basis points – but overall pricing has come down a little. We can probably put this down to the still volatile swap rate market which clearly plays a massive role in mortgage pricing.
The anticipation is that even if the Bank of England continues to drop BBR through the rest of 2025, product rates may not move at the same pace, given the uncertainty around inflation/rates/the UK economy, and indeed, world events which in no way can be said to be stable at the moment.
It therefore looks like being an uncertain month for would-be home purchasers and sellers, plus an uncertain picture for rates for at least for the foreseeable future.
