First-time buyers seizing cheaper mortgages - and the freedom to borrow more - have pushed up the average price paid for a first home by 7.1% in a year.
Official Land Registry data for Great Britain shows that buyers who collected the keys to their first home in March paid an average of almost £231,000. That’s £15,350 more than the average paid during the same month in 2024.
Between January and March, the average price paid by a first-time buyer spiked by £4,772, a 2.1% increase in just two months. First-time buyer prices rose 2.5 times faster than those paid by buyers who already own a home, for whom prices rose by just 0.8%.
Analysis of the data by MPowered found the first-time buyer spending spree was strongest in northern England. The average first-time buyer in Yorkshire and the Humber paid £9,467 more for their home in March than in January.
Meanwhile first-time buyer prices spiked £9,151 in North East England - a 6.6% increase in just two months. The average price paid for a first home in the North East has risen by 15.1% in a year and 40% in five years.
The average price paid for a first home in East Anglia rose by £8,148, a 2.9% jump and well above the £5,777 increase in prices paid by buyers who already own a home.
At the other end of the spectrum, prices fell across the board in London. But while the average price paid in the capital by second-steppers and those who already own a home fell by £19,048, first-time buyers paid just £4,742 less on average.
Price inflation for first-time buyers has outstripped that faced by movers who already own a home for a number of years. Since 2020, the price of the average first home in Britain rose by 27.1%, while the average price paid by movers rose by 25.2%.
An increase in the stamp duty paid by most first-time buyers that came into force at the end of March led many to rush through their purchases to beat the deadline, and this fanned the flames of first home inflation at the start of 2025.
Separate data from the Bank of England shows that 31.4% of the £77.6bn in new mortgage lending completed in the first quarter of 2025 was to first-time buyers - the highest share on record and up 5.6% compared to the same period in 2024.
But MPowered’s analysis suggests that first home prices could continue to accelerate even though the ‘stamp duty stampede’ is over.
Peter Stimson, director of mortgages at MPowered, explained: “Since last August the Bank of England has reduced its base rate by a full percentage point. While this has brought down mortgage interest rates for all customers, buyers have also seen their borrowing power surge thanks to a relaxation of lending criteria.
“When deciding how much to lend to someone, lenders must ‘stress test’ the customer’s ability to cope with an increase in interest rates during the first five years of their mortgage.
“The stress test benchmarks used by lenders have been significantly lowered in recent months, thanks to a combination of the falling Bank base rate, reductions in Standard Variable Rates and the adoption of a more flexible approach by the Financial Conduct Authority.
“As a result, buyers are routinely being offered loans up to 20% larger than they were a year ago. For first-time buyers, who typically borrow close to the maximum they can, the ability to borrow more, and pay more, for a home is pushing up prices sharply.
“Lower stress tests have replaced the stamp duty deadline as the fuel for a first-time buyer boom.”
