Homebuyers are being warned not to “act with haste” this year as mortgage rates still remain significantly high.
Stamp Duty thresholds will increase again on April 1, prompting a rush from buyers to finalise property purchases before the deadline.
However, with average mortgages priced 8.1% higher than they were last year – despite the Bank of England lowering central interest rates twice – buyers are urged to consider all factors before making the leap.
Stephanie Daley, director of partnerships at mortgage advisor, Alexander Hall, said: “A greater degree of stability returned to the property market in 2024, and we certainly saw a settling of the landscape with respect to the mortgage market.
“But the monthly cost of a mortgage today is higher than it was this time last year.
“This is an important factor for homebuyers to be aware of, particularly now that many will be acting with haste in hopes of beating the stamp duty deadline, which expires on April 1 this year.”
Stamp Duty is a tax currently levied on homes over £250,000 for general buyers and £450,000 for first-time buyers. The amount depends on the property’s value, and different rates apply at different price points.
The former Conservative Government temporarily increased the thresholds to encourage buyers and boost the property market.
Now, the time is drawing closer for the nil-rate threshold to revert, which will see the tax be levied on properties priced over £125,000 for general buyers and £300,000 for first-time buyers instead.
The change could add thousands more pounds to homebuyers’ bills nationwide as house prices remain at an all-time high. Properties have increased in value by around 5.1% since last January, currently reaching a staggering £292,059 on average.
Based on this, Ms Daley said: “For the average homebuyer, a mortgage loan of £233,657 is required after placing a 20% deposit of £58,412.”
According to Moneyfacts, the average rate across 80% loan-to-value mortgages is currently 4.3%, up from 4.03% in January 2024.
Subsequently, Ms Daley said: “Today, the average buyer making a full mortgage repayment can expect to pay £1,272 per month – an increase of 8.1% or £95 per month.
“This means that over the course of a year, today’s homebuyers will be £1,142 worse off compared to those who purchased this time last year.”
She added: “It’s always best to seek the advice of an expert mortgage advisor when looking to buy in any market conditions. This will ensure you secure the very best mortgage available to you based on your financial position within the market.”
