UK mortgage lending plunges after April stamp duty changes, market faces fresh slowdown risk from Budget tax rumours

Mortgage lending in the United Kingdom fell sharply after higher stamp duty thresholds came into effect on April 1, industry data show, and the market now faces the prospect of a further slowdown as rumours of tax changes ahead of the Autumn Budget add to uncertainty.

Figures published by the Financial Conduct Authority show the value of new mortgage advances — the funds actually handed over to homebuyers — fell 24.2% between April and June compared with the three months from January to March. Gross advances declined from £77.6 billion in January–March to £58.8 billion in April–June, the lowest quarterly level since the first quarter of 2024.

The fall followed changes to stamp duty announced in 2022 and implemented this April that lowered temporary thresholds and raised the tax take on many transactions. From April 1, home movers began to pay stamp duty on properties costing more than £125,000, down from a previous threshold of £250,000. That change increased the upfront tax on a £250,000 purchase by about £2,500. First-time buyer relief was also narrowed: buyers began to pay stamp duty on homes costing more than £425,000 in April, with that threshold since adjusted to £300,000, according to industry commentary.

Despite the slump in gross advances, some forward-looking indicators were stronger. The value of new mortgage commitments — mortgages agreed with lenders but not yet drawn down — rose 14.6% to £78.2 billion compared with the previous quarter, suggesting some pipeline activity remained in place.

Karen Noye, mortgage expert at wealth manager Quilter, said the start of 2025 had seen a surge in activity as buyers rushed to complete purchases ahead of the April tax changes. "The start of 2025 had seen a marked lift in lending activity as people rushed purchases before the shift in the tax rules saw their stamp duty bill rise substantially overnight," she said. "However, with interest rates still high and stamp duty costs inflated, it came as no real surprise that there was such a downward shift in the months that followed."

Simon Gammon, managing partner at Knight Frank Finance, said lenders were focusing on first-time buyers to gain market share. "Mortgage lending remains subdued, with gross advances down sharply in the last quarter — but the forward-looking indicators tell a different story," he said.

Industry participants warned, however, that the data were collected before recent speculation that the Labour government could introduce broader property tax changes in the Autumn Budget. Rumours circulating in recent weeks about potential tax measures have already been cited by property experts as a factor prompting would-be sellers and buyers to pause decisions until the Budget, scheduled for late November.

"Budget rumours are also adding to the uncertainty and talk of new property-related taxes could result in would-be sellers putting their plans on hold until they have a clearer picture, so there is still a risk that the market stalls further in the near term," Noye said.

The impact of the April changes was uneven across the market. First-time buyers in higher-priced areas were among the hardest hit. In London, where average property values remain above the national mean, the typical buyer saw a larger increase in stamp duty bills when the thresholds shifted; industry calculations in the quarter showed buyers of an average London home faced a much bigger upfront tax bill than under the earlier thresholds.

Analysts said higher mortgage rates remain a constraint on demand, limiting borrowing capacity and reducing some buyers' willingness to enter the market even where they are not directly affected by stamp duty changes. Lenders, brokers and advisers continued to urge borrowers with impending remortgages or agreed purchases to monitor rates and to lock deals as appropriate, while noting that fees and product terms vary across providers.

Market watchers said the coming weeks will be important for sentiment. If the Autumn Budget contains significant measures affecting property taxation, the timing and design of any changes could influence the pace of transactions into 2026. Until then, the combined effect of higher stamp duty thresholds and elevated interest rates is likely to keep activity below the levels seen at the start of the year, according to lenders and brokers surveyed by industry press.

The FCA data provide the latest snapshot of a market adjusting to both fiscal policy shifts and a higher-interest-rate environment. While commitments indicate some deals remain in the pipeline, a clear policy signal from the government in the Autumn Budget will be needed to reduce uncertainty and allow buyers and sellers to reassess plans with greater confidence.