The Spring Statement 2025, delivered by Chancellor Rachel Reeves, outlines a range of fiscal policies that will influence the housing market. This report explores the implications for first-time buyers, remortgages, equity release, and mortgage interest rates more broadly.
Mortgage Interest Rates and the Bank of England Base Rate
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While the Spring Statement did not announce any direct changes to the Bank of England base rate, it arrives at a time when interest rates remain under intense scrutiny. Inflation fell to 2.8% in February 2025, edging closer to the Bank’s 2% target, but not enough to warrant an immediate cut to the base rate.
The Bank of England has so far held the base rate at 5.25%, citing ongoing caution due to sticky services inflation and global economic uncertainty. This continues to put upward pressure on mortgage rates across the board.
However, there are signs of competition heating up among lenders. Some major mortgage providers, including Nationwide, have begun cutting fixed rates in anticipation of future base rate reductions later in the year. First-time buyers, home movers, and remortgagers may benefit from these early shifts, though current rates remain significantly higher than in the ultra-low interest rate era of the 2010s.
Borrowers are advised to:
- Lock in fixed deals now if affordability is key and they fear further delay in base rate cuts.
- Consider variable or tracker deals cautiously, depending on rate forecasts.
- Use mortgage brokers to identify lenders offering competitive or tailored deals.
First-Time Buyers
One of the most significant changes is the reversion of the Stamp Duty Land Tax (SDLT) thresholds to pre-September 2022 levels from April 1, 2025. For first-time buyers, this means the SDLT threshold drops from £425,000 to £300,000, increasing the upfront cost of buying a home.
This move has been criticised for potentially pricing out new buyers in high-demand regions, particularly London and the South East.
To counteract this impact, the government has committed £2 billion to affordable housing, aiming to build 18,000 affordable and social homes. Additionally, mortgage lenders like Nationwide have introduced more attractive products for those with smaller deposits, with some 5% deposit buyers accessing rates below 5%
Remortgages
With many fixed-rate deals coming to an end in 2025, thousands of homeowners will be exploring remortgaging in a challenging interest rate environment. Although inflation is falling, the high base rate has kept many remortgage deals above 4.5%–5%.
Some lenders are beginning to ease rates slightly in anticipation of rate cuts later in the year, offering a glimmer of relief for borrowers. However, the overall climate remains cautious.
Borrowers are encouraged to:
- Review their current mortgage term well ahead of expiration.
- Speak with a broker to understand whether to fix now or wait.
- Explore product transfer options with their existing lender as an interim solution.
Equity Release
The Spring Statement did not contain direct measures relating to equity release. However, the broader economic picture, particularly interest rate trends and housing market confidence, has a significant bearing on equity release products.
Rising interest rates over the past two years have made lifetime mortgages more expensive, reducing the amount homeowners can release and increasing future repayment liabilities. With potential rate cuts on the horizon, advisers suggest homeowners considering equity release should monitor market conditions carefully and assess alternatives.
Outlook for 2025
The Spring Statement underscores the fragile balance in the UK housing market. While efforts to increase housing supply are welcome, tax changes and high borrowing costs continue to pose challenges for both buyers and existing homeowners. The mortgage market is in a period of transition, and outcomes will largely depend on the direction of interest rates and lender confidence.
For homebuyers, the key takeaway is the importance of early planning, seeking advice, and understanding the full cost of homeownership in a shifting economic environment. With uncertainty still a factor, staying informed and flexible will be vital throughout the remainder of 2025.
Disclaimer
The information contained within was correct at the time of publication but is subject to change. Estate planning is referred to a third party. Neither Liddle Perrett Ltd nor PRIMIS are responsible for the service received. These services are not regulated by the Financial Conduct Authority and may have limited consumer protection. This information is provided as a general guide and should not be taken as financial or legal advice. Your individual circumstances may vary, and we recommend consulting with a qualified financial advisor or solicitor to discuss your specific needs.
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