Introduction
First time buyers borrowed a record £82.8bn in 2025, a whopping 30% jump from last year. What’s driving this mortgage boom? A perfect storm of stamp duty panic, loosening lending rules, and the simple fact that renting has become unbearable for many Brits. With 390,000 first-timers securing mortgages in the year to September, it’s clear the race to homeownership is heating up. Here’s what’s behind the surge and why 2026 could see even more buyers climbing onto the ladder.
The Stamp Duty Rush Explains the Spike
Let’s be honest, nothing motivates buyers quite like a looming tax deadline.
First time buyers rushed to complete purchases before 31 March, when the stamp duty nil rate threshold dropped from £425,000 back to £300,000. That’s a massive difference for anyone buying in pricier areas.
The result? Mortgage applications skyrocketed by around 130% early in the year as buyers scrambled to lock in savings. According to Savills’ analysis, this stamp duty holiday ending was a major catalyst behind the 30% year-on-year increase in first time buyer borrowing.
The total UK housing market value also climbed 14% to £417bn in the same period, showing strong overall activity beyond just first-timers.
Lenders Have More Room to Say Yes
It’s not just tax deadlines pushing the numbers up. Banks can now lend more freely thanks to updated Financial Conduct Authority guidance on mortgage regulation interpretation.
These policy tweaks gave lenders breathing room to approve higher loan amounts and work with a broader range of applicants. Combined with falling mortgage rates as interest rates dropped, borrowing became genuinely more accessible.
Lucian Cook, head of residential research at Savills, summed it up: “Homeownership is more accessible now than at any point in the last three years, thanks to lower borrowing costs, lower real house prices, and more accessible mortgage debt.”
In other words, the stars have aligned—at least temporarily—for aspiring homeowners.
Why First Time Buyers Are Desperate to Buy
Here’s the harsh reality: renting in the UK has become increasingly grim.
Property shortages mean rental supply is tight, and monthly rents keep climbing. Many first time buyers are simply fed up with throwing money away on rent and want the stability (and potential equity gains) that come with ownership.
For many, buying isn’t just aspirational anymore, it’s a financial escape route from spiralling rental costs.
What’s Next for 2026?
The momentum isn’t slowing down. Experts expect first time buyer activity to remain strong in 2026, driven by:
- Further interest rate cuts: Lower rates mean cheaper mortgages and bigger budgets
- Continued rental market pressure: More renters will look to buy as costs stay high
- Existing homeowners moving: Falling rates will help current owners afford larger loans to upsize
Cook noted that existing mortgage holders are also expected to become more active, taking advantage of better rates to increase their budgets and move up the property ladder.
The Bottom Line
First time buyer borrowing hit record levels in 2025 because the conditions were right: stamp duty savings, easier lending rules, and rental market desperation all played a role. With interest rates still falling and housing supply tight, 2026 looks set to continue this trend.
If you’re thinking about buying, now might genuinely be a decent window—just don’t expect it to get easier as more buyers pile in.
Want to stay ahead of UK property and finance trends? Keep following the latest mortgage rate changes and housing market analysis to time your move right.
FAQ: First Time Buyer Borrowing in 2025
Q1: How much did first time buyers borrow in 2025?
A: First time buyers borrowed a record £82.8bn in the year to September 2025, spread across 390,000 mortgages. This represents a 30% increase compared to the previous year.
Q2: Why did first time buyer borrowing increase so much?
A: The surge was driven by buyers rushing to complete purchases before the stamp duty holiday ended on 31 March, plus easier lending rules from updated FCA guidance. Lower mortgage rates and desperate renters escaping high rental costs also contributed.
Q3: What happened to the stamp duty threshold for first time buyers?
On 31 March 2025, the nil rate stamp duty threshold for first time buyers dropped from £425,000 back to £300,000. This caused a spike in applications early in the year as buyers tried to complete before the deadline.
Q4: Will first time buyer borrowing continue to rise in 2026?
A: Yes, experts expect momentum to continue into 2026 thanks to further anticipated interest rate cuts and ongoing rental market pressures. Existing homeowners are also expected to become more active as mortgage rates fall.
Q5: How much did the total UK housing market grow in 2025?
A: The total value of the UK housing market increased by 14% to £417bn in the year to September 2025. This growth reflected strong activity from both first time buyers and existing homeowners.
DISCLAIMER
Effective Date: 15th July 2025
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