Stamp Duty changes took effect, driving rush of house purchase completions in Q1 2025

House purchase lending was artificially heightened through to the end of March 2025 as customers rushed to complete before changes to Stamp Duty that took effect on 1 April, according to UK Finance's Household Finance Review¹. The review, published in June 2026, said the first quarter of 2025 saw activity increase through to the end of March for that reason¹.

UK Finance's earlier review of the fourth quarter of 2025 said house purchase lending "saw very strong growth in the first quarter, as buyers rushed to beat the stamp duty changes which took effect from April"². Its review of the second quarter of 2025 said March saw "a big spike in activity as homebuyers rushed to complete ahead of the changes"³. That review also reported that April showed a sharp drop, with first-time buyer numbers falling 15 per cent and movers by 31 per cent compared with April 2024, moderating in May when movers fell by 13 per cent³.

The distortion affects how later figures compare. UK Finance said borrowing for house purchase fell in the first quarter of 2026 compared with a year earlier, but that year-on-year comparisons are distorted by the rush to beat the Stamp Duty changes in 2025¹. It added that the provisional value of lending in 2026 through to May suggests activity is down about seven per cent compared with the same period in 2025, and that the final outturn for 2026 house purchase lending is likely to be below its December forecast of a two per cent increase, to £128 billion¹.

The Q1 2026 review also set out wider pressures on household finances. Inflation rose to 3.3 per cent in March 2026, from three per cent at the start of the year, driven mainly by high auto fuel prices, which have risen by around a fifth since the end of February, and increases in airfares¹. The GfK headline barometer index dropped to -21 in March 2026, the weakest reading since April 2025¹. Bank Rate has been held at 3.75 per cent at both Monetary Policy Committee meetings since the start of the US-Iran conflict, though one member preferred a 25 basis-point rise in April¹. Markets are currently expecting around two rate rises in the UK this year¹.

Why it matters for households

The Stamp Duty deadline pulled purchases into the first quarter of 2025, which means comparisons with 2025 figures understate underlying activity in 2026¹. UK Finance said activity later in the second quarter of 2026, after the distortions of last year wash through, may be pivotal¹. For anyone buying or remortgaging, the review reported that new mortgage pricing is volatile and affordability is already at very stretched levels¹. Refinancing was strong in the first quarter of 2026, with half a million transactions, up by one third on the first quarter of 2025, though the impact of higher mortgage pricing is beginning to show and is likely to increase further in the second quarter¹. UK Finance said robust underwriting and stress-testing mean borrowers are well-placed to absorb additional costs¹. It also reported no signs of stress in unsecured credit, with mortgage arrears continuing to tick down towards the historic lows seen in 2022 and possessions essentially unchanged¹.

What happens next

The Bank of England has not committed to any particular path for rates and will monitor incoming data¹. It presented three scenarios for future oil and gas prices, ranging from scenario A, in which the oil price peaks at $108 before falling below $80 at the start of next year, to scenario C, in which the price peaks at $130 and remains elevated for the next year; in scenario C inflation could head towards six per cent next year¹. UK Finance said the extent of monetary tightening in the coming months will depend on how the conflict evolves¹.