Mortgage Approvals Plummet as Stamp Duty Holiday Ends: What It Means for the UK Property Market
UK mortgage approvals reached their lowest level in over a year in April following the end of the stamp duty holiday. Here’s what professionals need to know and do next.
April saw mortgage approvals drop to 60,463; a figure not seen since February 2024; as the stamp duty holiday ended on April 1. This comes after a surge in March when buyers rushed to complete purchases before the deadline. Net mortgage lending declined by £759 million, marking the sharpest monthly fall since January 2024.
For anyone working in property; be it developers, estate agents, investors or lenders; this shift offers important signals. In this article, we look at what lies behind the drop in mortgage activity, how it is affecting the housing market, and what the next steps should be.
What Drove the April Slump
The dramatic drop in mortgage approvals needs to be understood in its context.
1. Rush to beat stamp duty changes
The reduction in transaction costs in March pulled activity forward. Once the holiday ended, those sales ceased, leaving April quieter by comparison. The result was a significant drop in both approvals and volumes.
2. Tighter affordability tests remain in place
Despite signs of lower interest rates, lenders continue to apply strict stress-testing rules. Borrowers must now show they can absorb sizeable rate increases; upside protection that limits borrowing power.
3. Cost-of-living pressures persist
While wage growth is steady, rising everyday bills mean many households are delaying purchase decisions. Even essential purchases now demand careful budgeting, and borrowers are looking for certainty before committing.
These factors combined to silence the lender pipeline, pushing approvals down significantly.
What It Means for the Property Market
The slump in April mortgage approvals has ripple effects across the sector.
Sales volumes will slow in the short term
Mortgage approvals often predict sales activity 6 to 8 weeks ahead. A drop in approvals suggests fewer exchange of contracts in the weeks to come, potentially stalling activity across the market.
Price movement will vary by segment
Expect the entry‑level and mid‑price end of the market to show more pressure. That segment catered heavily to deadline-backed buyers. Higher-end properties; where cash buyers rule; may see steadier demand.
Help to Buy schemes may regain attention
With housing affordability squeezed, more eyes may turn back to demand‑side support. The timing is right for a revived Help to Buy scheme, particularly given evidence that stricter lending has priced out first‑time buyers.
What Property Professionals Should Do
Estate Agents
Review current listings and provide honest advice on pricing. If buyers are acting in May or June, they may still be negotiating. Agents can support by updating comparable sets and reinforcing urgency to move ahead of summer slowdown.
Mortgage Brokers
Now is the time to highlight lender-specific rules. Brokers who can navigate stress test variations, unlock higher loan-to-income bands, or offer longer-term remortgage deals will see growing demand.
Developers
Prepare construction and sales timelines with care. New schemes entering the market in late summer should include a buffer for approval volatility and understand how marketing messages around affordability and incentives can shift buyer sentiment.
Investors and Landlords
A dip in purchase activity may temporarily shift tenant decisions. Renters who were considering moving now may stay put. Investors should focus on retention strategies; renewal incentives or flexibility in lease terms may maintain income stability.
Signs the Market May Rebound
Despite April’s sharp decline, underlying metrics suggest a recovery remains possible:
Interest rate growth is slowing
While rates remain elevated, markets and the Bank of England are signalling inflation is easing. A rate cut this autumn could shore up affordability and prompt a return to normal levels of approvals.
Affordability testing is easing
Some lenders have already started relaxing stress rates, offering applicants around £39,000 more borrowing power than before. If this becomes standard, approved applicants will increase accordingly.
Warming summer activity likely
Seasonally, and politically, summer typically sees a rise in buyer activity. With pressure to transact before school breaks, spring launches could see renewed traction in June and July.
Strategic Moves for the Second Half of the Year
Reassess lending packages
Brokers and advisors should revisit lender criteria to highlight options that meet stress-test standards while maximising borrowing capacity.
Refresh marketing campaigns
Developers and agents can reset messaging. Emphasise flexibility, affordability, and timing. Summer purchasers may feel differently now than buyers in March.
Focus on retention
Landlords should prioritise tenant quality, stay on top of maintenance, and build goodwill through transparent communication and support with utilities or services.
Stay alert for regulatory changes
Watch for FCA updates or government mortgage support initiatives. Preempting new policy announcements could give clients an edge in securing early deals.
