First-time buyers in the UK are taking out longer mortgages as they struggle to get onto the housing ladder.
Despite this, mortgage completions rose sharply in the first quarter of 2025 as both first-time buyers and homemovers sought to complete transactions to benefit from lower Stamp Duty rates before changes took effect on 1 April, new data from UK Finance shows.
In Q1 2025, first-time buyer completions increased 62% year-on-year and homemover completions increased by 74%. There were notable peaks in March, with the number of first-time buyers and homemover completions increasing by 113% and 140% respectively compared with March 2024.
Early data for April suggests a natural cooling of activity following the rush to secure lower Stamp Duty rates.
Mortgages and affordability
Despite this surge, affordability remains stretched. Borrowers continue to take longer mortgage terms to help manage affordability pressures, especially first-time buyers.
The average first-time buyer mortgage term is now 31 years as of March, compared with 28 years in March 2015.
The increase in the average term has been driven primarily by a significant increase in borrowing over a 40-year period, typically the maximum allowed under lenders’ policies.
The amount spent by first-time buyers on mortgage payments relative to their income is also high. Even as interest rates have come down, this measure of affordability has not eased significantly, with rising house prices largely offsetting any lowering of payments through falling rates, UK Finance said.
The total amount of household savings increased in Q1, up three per cent compared with March 2024. Recent Bank of England data suggests more households are building precautionary savings, likely in response to economic uncertainty.
Growth was concentrated in notice accounts and cash ISAs. The amounts deposited in these types of accounts increased by 10% and 11%, respectively, during the quarter.
“We saw a significant rise in mortgage activity in the first quarter as households moved quickly to take advantage of lower Stamp Duty rates,” said Eric Leenders (Managing Director of Personal Finance)
“Savings also continue to build, with consumers increasingly favouring notice accounts and ISAs. As discussions around cash ISA reforms continue, it remains clear that many savers continue to favour them as a reliable means to build and protect their savings.
“While these are signs of growing financial resilience, the challenges many households face, particularly around affordability, remain. Anyone worried about their mortgage or financial situation should speak to their lender early to explore the support available,” he said.
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