Why First-Time Buyer Business Didn’t Fall Off a Cliff on 1st April

A Busy Few Months

It's been a whirlwind, hasn't it? The end of 2024 and the start of 2025 saw a surge in first-time buyer activity as aspiring homeowners rushed to beat the April stamp duty deadline. At Halifax, we witnessed a significant increase in completions, with 8,000 between 17th-25th March and a whopping 11,000 between 26th-31st March. You probably saw a similar spike in your business, especially from first-time buyers facing the biggest relative hikes in stamp duty due to the return to lower nil-rate thresholds.

What Happens Next?

Now that the deadline has passed, it's natural to expect a dip in transactions. Many buyers brought forward their purchases to save on tax, but let's be realistic, the housing market isn't going to fall off a cliff. People still want and need homes, and they need the help of brokers more than ever to minimize their costs in the face of higher taxes and the volatility of economic factors.

BoE Base Rate and Mortgage Rates

The recent fallout from US trade tariffs saga has resulted in significant market volatility, including UK interest rates. At the time of writing 2-year and 5-year swaps are down approximately 10bps and 5bps respectively, having once been as much as -40bps during the volatility since “US liberation day”. Markets are pricing in a 90% probability of a reduction to the BoE base rate when the MPC next meets on 8th May. But by the time you read this that could have changed, such is the level of uncertainty markets have in the US administration.

Supporting Aspiring Homebuyers

The FCA recently reminded lenders of the existing flexibility in its affordability rules and announced a review into its stress testing rules to support market growth. We have already seen the relaxing of stress testing of affordability from some lenders, meaning there is now the potential to borrow more money, making home ownership more attainable. Other major lenders, including Halifax, were already looking at how they can support more first-time buyers onto the property ladder. The balance of helping customers access funds, whilst keeping them financially resilient remains a careful balance.

What You Can Do Now

First-time buyers need help now, and brokers are in the best position to provide it. Here are some steps you can take to give your clients the best possible chance to get a mortgage offer:

1. Educate Them on Mortgages and the Buying Process: Don't overestimate their knowledge or underestimate yours. Go back to basics on different mortgage types, costs of buying, and a step-by-step guide to the process.
2. Help Them Prepare Their Finances: Ensure they understand the importance of saving their deposit and putting themselves in the best financial position possible. This means staying in the black on their current account, meeting all credit commitments, and avoiding unnecessary subscriptions and 'pay in three' temptations.
3. Offer Alternative Routes on to the Ladder: If they don't have the deposit or income to get a mortgage without help, explore alternatives like guarantors or shared ownership. Highlight any local developments that support shared ownership.
4. Manage Their Expectations: Some aspiring homeowners may not be in a position to buy just yet. Show them what they can afford now by running a DIP and provide tips on budgeting and saving effectively. They will appreciate the honesty and hopefully come back to you when they are ready to buy.
5. Keep Up to Date: High LTV lending and first-time buyer-specific mortgages change regularly. Stay informed about lender announcements, especially in light of the regulator's recent comments on stress testing.

The Bigger Picture

There were 341,068 first-time buyer purchases last year. Even with the change to Stamp Duty, this is a significant market that will remain a mainstay of many brokers' business. The desire to own a home hasn't dimmed, 83% of those aged 18-34 are still eager to buy their first home.

As brokers, you are the trusted source of information and advice that first-time buyers need to help them purchase a property. Let's keep supporting aspiring homeowners and ensure they get the best possible start on the property ladder.