Half of FTBs need 90%-plus mortgages after Stamp Duty change – Twenty7tec

Stamp Duty changes have made it tougher for first-time buyers (FTBs), with nearly half (49.49%) now needing mortgages of 90% or more, according to research from Twenty7tec.

Following the change, 90% plus loan-to-value (LTV) borrowing among FTBs rose from 48.84% to 49.49%. 

At the same time, FTB searches dropped by 6.37%, down from 1,007,752 in Q1 to 943,554 in Q2. 

Many buyers rushed to complete before the changes took effect, leading to a quieter market in the following months.

Nathan Reilly, director at Twenty7tec, said: “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.” 

Reilly added: “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.”

The share of FTB searches for homes over £300,000 fell from 37.83% to 37% after the change, as some buyers lowered their budgets to avoid the new 5% charge. 

Across the board, 90%-plus LTV borrowing rose from 21.88% to 22.17%, showing more buyers are stretching deposits due to affordability issues. 

Searches for mortgage deals under two years also increased from 41% to 46.5%, with more borrowers choosing short-term products, likely expecting interest rates to fall.

He said: “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.”

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