Nearly half of first-time buyers now need 90%+ mortgages

The stamp duty shake up is squeezing first-time buyers, resulting in almost half needing 90% LTV or higher mortgages, according to new figures from Twenty7tec.

Before 1st April 2025, first-time buyers paid no stamp duty on homes up to £425,000. From April, the nil-rate threshold fell to £300,000. Purchases between £300,001 and £500,000 now face a 5% charge, and relief was removed entirely above £500,000, down from the previous £625,000 cap.

Following the announcement – and in the months that followed –  90%+ LTV borrowing among first-time buyers increased from 48.84% to 49.49%, with nearly half now relying on high LTV mortgages to get on the ladder.

In tandem, first-time buyer searches fell by 6.37%, down from 1,007,752 in Q1 to 943,554 in Q2, signifying a trend where many rushed to complete purchases before the stamp duty changes took effect.

The drop reflects buyers bringing their decisions forward, resulting in a quieter Q2 as the post-deadline pipeline cleared.

The proportion of first-time buyer searches for homes over £300,000 fell from 37.83% in Q1 to 37% post-change, as some buyers lowered their budgets to avoid the new 5% stamp duty charge.

Overall 90%+ LTV borrowing rose from 21.88% to 22.17%, indicating more buyers are stretching their deposits due to affordability pressures.

The proportion of mortgage searches for deals under two years rose from 41% in Q1 to 46.5% in Q2, as more borrowers opted for short-term products – likely expecting interest rates to fall in the coming years.

Nathan Reilly, director at Twenty7tec, commented: “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. 

“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.

“Yet, despite the dip in first-time buyer activity, total standard residential searches – which include movers and remortgagers – rose by 3.95%, from 4,167,357 in Q1 to 4,222,591 in Q2. The overall market remains strong, driven by those already on the property ladder, who appear unaffected by the stamp duty change.

“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.”