The Spring Budget 2025 is on the horizon (26th March), and with it comes the potential for changes that could significantly impact the mortgage market.
Fee-free mortgage broker Mojo Mortgages has carefully assessed the possible scenarios and their implications for homeowners and aspiring first-time buyers before transforming this insight into a guide: How will the Spring Statement 2025 impact my mortgage?
While a major overhaul of fiscal policy isn’t expected, even subtle adjustments could have a ripple effect on affordability and access to homeownership.
Stamp Duty Changes: A Crunch Point for Buyers
The planned changes to Stamp Duty Land Tax (SDLT), scheduled for 1st April 2025, remain a key area of concern. These changes will lower the thresholds for both first-time buyer relief and home movers, which could add thousands to the upfront costs of buying a home.
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For First-Time Buyers: The threshold for 0% SDLT drops from £425,000 to £300,000. This means first-time buyers in many parts of the country will face a higher tax bill.
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For Home Movers: The 0% threshold decreases from £250,000 to £125,000, increasing the cost of moving for many families.
Adil Choudry, a Mortgage Advisor at Mojo Mortgages, explains: “The Stamp Duty changes are a real worry. For some, it could be the difference between being able to afford a home or not. We need to see if the Chancellor acknowledges the impact these changes will have, particularly on first-time buyers who are already struggling with rising house prices and the cost of living.”
ISAs and LISAs: Savings Lifelines Under Threat?
Potential tweaks to Individual Savings Accounts (ISAs) and Lifetime ISAs (LISAs) are also being watched closely.
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Cash ISA Limits: There’s speculation that the Chancellor might reduce the amount you can put into a cash ISA each year. This would be a blow to first-time buyers who rely on these accounts to build their deposit.
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Lifetime ISA Thresholds: The £450,000 property price limit for LISAs is becoming increasingly out of sync with house prices in many areas.
Choudry continues: “Lifetime ISAs are a fantastic way for first-time buyers to boost their savings. But if the property price cap isn’t raised, it becomes useless for those trying to buy in more expensive regions. We’re hoping the Chancellor will recognise this and make the necessary adjustments to keep the dream of homeownership alive.”
Economic Uncertainty and Mortgage Rates: A Balancing Act
The UK’s economic outlook continues to play a significant role in determining mortgage rates. While the recent cut in the Bank of England’s base rate offered some respite, persistent inflation is creating uncertainty.
Choudry adds: “The economic picture is still a bit murky. Borrowers are caught between hoping for further rate cuts and the risk of inflation staying higher for longer. The Spring Budget’s economic forecasts will be key in setting the tone for the mortgage market in the coming months.”
Navigating the Budget: Expert Advice is Crucial
Given the potential changes and economic uncertainties, getting expert mortgage advice is more important than ever.
Mojo Mortgages recommends:
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Stay Informed: Follow the Spring Budget announcements closely and understand the potential implications.
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Get Personalised Advice: A mortgage broker can assess your individual situation and recommend the best course of action.
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Shop Around: Compare mortgage deals to ensure you’re getting the most competitive rates.