The Chancellor announced in her Spring Statement several cost-saving measures to allow for a weaker economic outlook and for greater spending on defence. Also announced, was a reinforcement of the initiatives to build more houses to meet the UK’s growing need for housing and as a means of boosting economic growth.

Housing Market Stability and Growth

The government has announced ambitious plans to boost housebuilding, aiming to construct 1.5 million new homes by 2030, which would mark a 40-year high in housing construction. This initiative is expected to increase property transactions and contribute significantly to the GDP.

However, despite this increase in housing supply, the Office for Budget Responsibility (OBR) forecasts that average house prices will rise from £265,000 in late 2024 to £295,000 by the end of the decade. This suggests that while more homes will be available, affordability may remain a challenge.

Mortgage Interest Rates and Inflation

The OBR has revised its inflation forecast, now expecting it to peak at 3.8% in July 2025, higher than previous estimates, and not returning to the Bank of England’s 2% target until the following year. This could influence the Bank of England’s decisions on interest rates, potentially delaying further rate cuts. For borrowers, this means that mortgage rates might remain elevated in the near term.

The Chancellor made a point that interest rates had been cut three times since Labour has been in power, but that point was contested by the Shadow Chancellor who suggested interest rates could have been cut more frequently with alternative economic policy.

Support for First-Time Buyers

The Spring Statement did not introduce new schemes specifically for first-time buyers, no was it expected to. Notably, there was no extension to the Stamp Duty relief for first-time buyers, which means that previous benefits may no longer be available.

A reminder that as of 1 April 2025, the zero-rate threshold is being cut from £250,000 to £125,000 and the first-time buyer rate of relief is falling from £425,000 to £300,000. Additionally, first-time buyer relief is falling from £625,000 to £500,000 meaning that more homebuyers and first-time buyers will be eligible to pay stamp duty tax.

Energy Efficiency and Green Initiatives

The Spring Statement did not announce new funding for energy efficiency improvements in homes. Homeowners interested in making their properties more energy-efficient should explore existing schemes and consult with mortgage advisers about potential financing options. A reminder that the government had previously announced a Help to Heat scheme designed to provide funding to allow homeowners to upgrade the heating and insulation systems in their homes. More information can be found here.

Implications for Home Movers

The government’s commitment to increasing housing supply may present more options for those looking to move. However, with house prices projected to rise and mortgage rates potentially remaining relatively high, it’s essential for home movers to assess their financial situation carefully and seek professional advice to navigate the current market effectively.

This is where using a mortgage broker to aid in finding a competitive mortgage deal can be the difference between a successful home move and a failed transaction.

Conclusion

The Spring Statement outlines a renewed effort and focus for the housing market, particularly in increasing housing supply to help achieve economic growth. Given how central economic growth is to the government’s agenda, it is likely that house building will generate a lot of attention. However, challenges such as rising house prices and potential delays in interest rate reductions highlight the importance of careful planning and informed decision-making for both first-time buyers and home movers.

At Grange Mortgages, we are dedicated to assisting you through these developments. Whether you’re entering the property market for the first time or considering a move, our expert advisers are here to provide personalised guidance tailored to your circumstances.

Contact us today to explore how these changes may affect your mortgage options and to develop a strategy that aligns with your home ownership goals.