Recent changes to stamp duty have placed further pressure on first-time buyers, with almost half needing 90% or higher loan-to-value mortgages, according to figures from adviser tech firm Twenty7tec.
Under the new rules introduced from 1 April 2025, the nil-rate threshold for first-time buyers fell from £425,000 to £300,000. Purchases between £300,001 and £500,000 now attract a 5% charge, while relief above £500,000 has been removed, down from the previous £625,000 limit.
Following the changes, the proportion of first-time buyers taking out 90% LTV or higher mortgages increased from 48.84% to 49.49%, according to Twenty7tec’s analysis.
At the same time, first-time buyer mortgage searches dropped by 6.37% – from 1,007,752 in the first quarter of the year to 943,554 in the second quarter – suggesting that many buyers rushed to complete before the new rules came into effect.
“This is a common occurrence when stamp duty rules change. Buyers accelerate plans to avoid paying more tax, and the market then cools as that upfront demand is met,” said Nathan Reilly, director at Twenty7tec. “What’s more concerning is that nearly half of first-time buyers are now relying on 90%+ loan-to-value mortgages – a sign of how stretched affordability has become.
“While high LTV products are nothing new, this level of reliance points to the mounting pressures buyers face when trying to get on the ladder.”
The figures also show a shift in buyer behaviour. The proportion of first-time buyer searches for homes over £300,000 fell from 37.83% in the first quarter to 37% after the changes, as some buyers reduced their budgets to avoid the new 5% stamp duty charge.
Overall, 90% LTV borrowing across the market rose from 21.88% to 22.17%, reflecting ongoing affordability pressures.
More buyers also opted for shorter-term mortgages, with searches for deals under two years rising from 41% in Q1 to 46.5% in Q2, likely in response to expectations of future interest rate changes.
Despite the slowdown in first-time buyer activity, Twenty7tec reported that total standard residential searches – including movers and remortgagers – rose by 3.95%, from 4,167,357 in Q1 to 4,222,591 in Q2.
Reilly added: “Stamp duty changes never happen in isolation. They ripple through the market, affecting behaviour, affordability, and product choice. Advisers will need to continue guiding clients through these shifts as policy and economic conditions evolve.”
