First-time buyers made a record number of mortgage applications in the first quarter of 2025, but experts warn this positive trend could soon reverse following April's stamp duty threshold increase.
Yorkshire Building Society analysis shows the highest number of first-time buyer applications since the 2022 post-Covid peak, with 125,648 applications between January and March.
However, the building society cautions that many buyers now face paying thousands more in purchase tax after changes were implemented on April 1.
This tax increase, combined with already high house prices, could create a "cliff-edge moment" for first-time buyers who drive the entire housing market.
Yorkshire Building Society is sounding the alarm over stamp duty
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The first quarter of 2025 saw first-time buyer transactions rise by 12 per cent compared to the same period in 2024. This growth is double the average year-on-year increase recorded for the same period since Stamp Duty incentives were introduced in 2017.
First-time buyers now represent an all-time high proportion of overall purchasers, reaching 55.75 per cent in Q1 2025. This marks a significant increase from 49.78 per cent eight years ago when the incentives were first implemented.
The strong performance follows a recovery in 2024, which saw 333,046 first-time buyer home purchases, up nearly 16 per cent from 2023's figures.
Max Shepherd, group economist for Yorkshire Building Society, explained: "FTB transaction levels to the end of March 2025 were bolstered by people rushing to beat the April 1 deadline."
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"However, given the first-quarter figure has risen steadily since the incentive was introduced in 2017, the risk now is that the higher purchase tax, coupled with high house prices and other costs, add up to a cliff-edge moment for a group of borrowers who power the entire market."
He added that some buyers missed the March deadline and now face disappointment. Others must save even more to become purchase-ready "amidst already-stretched affordability.
"This means we could see activity tail off from Q2, and it just remains to be seen by how much," Shepherd warned.
The economist highlighted a potential domino effect that could undermine years of progress in the housing market.
"The added danger is that if this change also deters home-movers, there will be fewer homes available for first-time buyers to buy, which would in turn increase property prices further out of their reach."
He called for industry-wide action to address the issue.
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First-time buyers and existing homeowners face increased costs from April 2025GETTY"Concerted industry action is needed to ensure this unwelcome change doesn't send the positive momentum built over the past eight years into reverse."
In response to these challenges, Yorkshire Building Society has taken action to support first-time buyers facing higher purchase costs.
Last month, the Society and its intermediary-only lending brand Accord Mortgages launched a new product range specifically for first-time buyers.
The new offerings include cashback of up to £6,250 to help offset increased expenses, including the higher Stamp Duty payments.
