New data from UK Finance has shown that the average first-time buyer mortgage term is now 31 years.

The data also showed that mortgage lending surged in the first quarter of 2025 (Q1), driven by homebuyers seeking to complete purchases before changes to Stamp Duty took effect in April.

Mortgage completions rose sharply in the first quarter of 2025 as both first-time buyers and homemovers sought to complete transactions to benefit from lower Stamp Duty rates before changes took effect on 1st April. For the quarter as a whole, first-time buyer completions increased 62 per cent year-on-year and homemover completions increased by 74 per cent.

There were notable peaks in March, with the number of first-time buyer and homemover completions increasing by 113 per cent and 140 per cent respectively compared with March 2024.

Early data for April suggests a natural cooling of activity following the rush to secure lower Stamp Duty rates.

Despite this surge, affordability remains stretched. Borrowers continue to take longer mortgage terms to help manage affordability pressures, especially first-time buyers. The average first-time buyer mortgage term is now 31 years as of March, compared with 28 years in March 2015. The increase in the average term has been driven primarily by a significant increase in borrowing over a 40-year period, typically the maximum allowed under lenders’ policies.

The amount spent by first time buyers on mortgage payments relative to their income is also high. Even as interest rates have come down, this measure of affordability has not eased significantly, with rising house prices largely offsetting any lowering of payments through falling rates.

The data shows a modest shift away from product transfers and towards more external remortgaging.

Refinancing activity declined by 13 per cent in Q1, largely due to fewer fixed-rate deals maturing early in the year. During the quarter eight out of ten mortgages that were refinanced were done via a product transfer, which is higher than long-term averages, but lower than 83 per cent in Q1 2024.

In total, around 1.6 million fixed rates mortgages are due to expire in 2025 as a whole.

Eric Leenders, Managing Director of Personal Finance, said “We saw a significant rise in mortgage activity in the first quarter as households moved quickly to take advantage of lower Stamp Duty rates. Savings also continue to build, with consumers increasingly favouring notice accounts and ISAs. As discussions around cash ISA reforms continue, it remains clear that many savers continue to favour them as a reliable means to build and protect their savings.

“While these are signs of growing financial resilience, the challenges many households face, particularly around affordability, remain. Anyone worried about their mortgage or financial situation should speak to their lender early to explore the support available.”

Source: Credit Connect