Santander UK has reported it saw a 130% increase in mortgage applications in Q4 2024 compared to Q4 2023, as buyers rush to secure a property purchase during the Government’s stamp duty holiday.

With the lender estimating the average property purchase taking four months from mortgage offer to completion, buyers securing a mortgage offer before the end of 2024 will have maximised their chances of benefitting from lower stamp duty costs, ahead of the April 1 2025 deadline.

From April, the stamp duty nil-rate threshold for first-time buyers will drop from £425,000 to £300,000, while for other buyer types it falls from £250,000 to £125,000.

As a result, a first-time buyer purchasing a home priced between £300,000 and £500,000 will face a 5% stamp duty charge on an additional £125,000 of borrowing, adding thousands of pounds to the overall cost. All other buyer types will pay 2% on the amount between £125,000 and £250,000 – a potential extra cost of up to £2,500.

Graham Sellar, Head of Intermediary Channel – Mortgages, at Santander, says:“We all know that buying a home – whether it’s our first or our forever home – comes with significant costs. Every penny counts when considering things like legals and removals costs, so it’s great to see so many people make the most of the holiday and secure their new home ahead of April.”

First-time buyers are set to see the biggest increase in potential costs as a result of the changes to stamp duty. In the South East, where the average house price is £385,600, first-time buyers could save up to £4,280 in stamp duty by purchasing before 1 April. After the change, if they are buying a property over £500,000, they will be faced with the same stamp duty costs as a next-time buyer, for example in London, where prices average £535,700, this would add a potential extra cost of £11,250.

First time buyer stamp duty payable:

Recent research by the bank reveals that first-time buyers are increasingly compromising on location to fulfil their dream of owning a home. Two-thirds (67%) of Britons who bought their first home in the last two years had never seen their new neighbourhood before buying, compared to just over half (51%) of those who bought more than five years ago. According to the research, first-time buyers moving to new neighbourhoods in the last two years saved an average of £29,000 compared to buying a house in the area they lived in before.

Areas like Waverley in the South-East and Waltham Forest in Greater London have experienced the greatest rise in first-time buyer sales over the past decade, highlighting sustained demand in these regions.