Uptick in Mortgage Approvals: What It Means for Buyers and Sellers

The UK housing market has seen an encouraging start to 2025, with mortgage approvals in January rising by 18% compared to the same period last year. This surge in activity suggests renewed buyer confidence, albeit with a notable push to secure property purchases before the stamp duty nil-rate threshold reverts from £250,000 to £125,000 in April. While this deadline is a key motivator, there are signs that underlying demand is strengthening beyond short-term tax incentives.

One of the primary drivers behind the surge in mortgage approvals is the impending change to stamp duty rules. Since September 2022, buyers have benefited from a higher nil-rate threshold, reducing upfront costs for many property purchases. With the threshold set to revert, buyers are eager to complete transactions before the deadline, taking advantage of the potential savings. However, this rush may mean a quieter-than-usual market in the months following April, as the pipeline of transactions clears out.

Despite the immediate rush, there are encouraging signs of a steady recovery in the housing market. The latest RICS UK Residential Market Survey indicates that estate agents are seeing an increase in property valuations and market appraisals compared to a year ago. This suggests that more homeowners are considering selling, which could lead to a modest but sustained rise in transaction levels over the coming months. Moreover, while some of the sales currently underway may not complete before the stamp duty deadline, the fact that buyers are still entering the market is a positive signal. It indicates a level of demand that extends beyond short-term tax incentives and reflects improved confidence in the stability of house prices and financing conditions.

Despite the positive indicators, it is important to acknowledge the broader economic uncertainties that could temper market momentum. Inflation, while easing from last year's highs, remains a concern, and its impact on household budgets continues to influence buyer behaviour. Additionally, while mortgage rates have stabilised following the turbulence of 2023-24, they remain elevated compared to pre-pandemic levels. Any fluctuations in borrowing costs could impact affordability and, in turn, transaction volumes. Another factor to consider is the cost-of-living pressures that many households still face. While wage growth has helped offset some of the financial strain, disposable incomes remain stretched for many potential buyers. The reversion of the stamp duty threshold in April adds another cost consideration, particularly for first-time buyers and those looking to move up the property ladder.

For buyers, the current window of opportunity means acting swiftly to complete purchases before April could lead to significant savings. However, those unable to meet the deadline should not be discouraged. The anticipated increase in listings suggests greater choice in the market, and as demand and supply rebalance, there may be more room for negotiation on price. For sellers, the increase in market appraisals suggests growing competition in the months ahead. Those considering listing their property may find now an opportune time, as buyer demand remains strong. However, realistic pricing and effective marketing will be key to securing a successful sale in an evolving market.

While the early-year surge in mortgage approvals is largely driven by the stamp duty deadline, the broader outlook for the housing market is cautiously optimistic. Increased appraisals indicate rising supply, and while economic headwinds persist, the gradual recovery in confidence could support a steady pace of transactions throughout the year. At Langford Rae Property Agents, we are closely monitoring these trends and are here to help buyers and sellers navigate the shifting landscape. Whether you're looking to move quickly ahead of the stamp duty change or planning for later in the year, our expert team is on hand to provide tailored advice and market insights. If you're considering buying or selling, get in touch today to discuss how we can help you make the most of current market conditions.

Source: Dataloft by PriceHubble, Bank of England, January 2025

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