How will the Spring Statement 2025 impact my mortgage?
The Chancellor of the Exchequer delivered the Spring Forecast to the House of Commons on 26th March 2025.
We’ve been keeping an eye on industry predictions and updates following the Spring Statement 2025 and what the Chancellor's announcement could mean for mortgage borrowers.
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Spring Statement Overview
As expected, the Chancellor did not announce many significant changes in the 2025 Spring Statement. The government had previously committed to only holding one major fiscal event each year - so any more significant announcements are likely to be made during the Autumn Budget later in the year.
The Chancellor did provide a summary of the UK’s economic outlook, as the Office for Budget Responsibility’s Economic and Fiscal Forecast was published at the Spring Statement.
While industry experts are not expecting the Spring Statement announcements to have an immediate and significant impact on the mortgage market or mortgage rates, it's well worth homeowners being aware of the UK's broader economic outlook.
British economy: the state of play
The Chancellor provided a summary of the UK’s economic outlook. Back in October, the Office for Budget Responsibility predicted the economy would grow by 2% in 2025, though they have now revised the growth forecast for 2025 to 1%.
The UK economy grew by just 0.1% in the last quarter of 2024. It then shrank by 0.1% in January and grew by 0.1% in February.
How could the UK’s economic performance impact mortgage rates?
Though the Bank of England base rate fell to 4.5% in February 2025 and remains at 4.5% in March 2025, the inflation rate has not lowered significantly. It now stands at 2.8% - almost a percentage point higher than the 2% target and slightly higher than predicted by the Office for Budget Responsibility.
The OBR expects inflation to average 3.2% in 2025, before falling to 2.1% in 2026. It expects inflation to meet the Bank of England's 2% target from 2027 onwards.
This takes us to the question many homeowners will be asking themselves: Will mortgage rates fall soon - or could they start to increase if the Bank of England decides to hold or even increase the base rate slightly in an effort to curb rising inflation? There are no guarantees, but experts still aren’t predicting sudden, significant changes in either base rate or mortgage rates.
The average two-year fixed mortgage rate (75% LTV) currently stands at 4.5%, seeing only variations of 0.1% since September 2024. This is still better news for borrowers compared to a year ago when the average two-year fixed mortgage rate (75% LTV) stood at 5%.
House building is set to reach a 40-year high
The Chancellor promised that 1.3 million homes would be built over the next five years as part of the government's 'Plan for Change', announcing that it would take them "within touching distance" of Labour's manifesto promise that 1.5 million homes would be built during this Parliament.
However, the Statement didn't touch on the mortgage market directly and no additional support for those hoping to get onto the property ladder was announced.

“Borrowers often ask us whether now’s a good time to fix, or whether they should hold out to see if rates reduce. However, the average standard variable rate of 7.99% is far higher than most fixed-rate deals out there, so homeowners could still be better off locking in a new mortgage deal. It can be helpful to work with a broker to compare mortgage products and chat through your options.”
Adil Choudry, Mortgage Expert
Upcoming legislative changes, Spring Statement industry updates and the potential impact on mortgage borrowers
Stamp Duty
As announced in the Autumn Budget 2024, we’re about to see a Stamp Duty shake up.
From 1st April 2025, significant changes to Stamp Duty Land Tax will take effect:
For first-time buyers
The 0% threshold will decrease from £425,000 to £300,000
Properties priced over £300,000 will be taxed at 5% on the portion between £300,001 and £500,000
Properties over £500,000 won’t be eligible for any first-time home buyer relief
For home movers
The 0% threshold for main residences will fall from £250,000 to £125,000.
A new 2% rate will apply on properties priced between £125,001 and £250,000, while the 5% rate will kick in for values between £250,001 and £925,000.
The rate will increase to 10% for those purchasing a property between £925,001 and £1.5 million
Any properties worth more than this will receive a 12% Stamp Duty charge on any portion over £1.5 million
For additional properties
The first £125,000 of the property value will incur a 5% charge
Properties valued between £125,001 and £250,000 will be taxed at 7%
Higher rates apply above the £250,000 threshold
These changes could have a significant impact on those looking to buy a new property or move home as - put simply - buying is going to become more expensive.
In addition to saving for a deposit and all the other expenses associated with a house move, buyers must now take into account the potential increase in Stamp Duty Land Tax too.
Spring Statement update: Analysts were correct and we did not see any revisions or reversals to the legislative changes already announced in the Spring Statement.
Employer National Insurance Contributions
As announced in October, Employer National Insurance Contributions (NICs) will rise to 15% from 6th April 2025 with the NIC threshold dropping to £5,000. These NIC changes are expected to raise between £23.8 billion and £25.7 billion a year.
This, of course, will have a major impact on employers who will now be facing much higher employment costs. We’re unlikely to know for sure just how much this will impact job losses, wage stagnation and consumer price increases until the changes kick in in April.
Spring Statement update: Analysts felt that, given such major tax hikes were introduced in Autumn, further changes for businesses were unlikely to be announced. This was the case and the Chancellor did not announce any adjustments to the changes due to come into effect in April.
Tax rises
Spring Statement update: No major UK tax changes were announced in the Spring Statement 2025. However, a Financial Times survey of 96 leading economists found that tax increases are expected before the next general election in 2029.
However, one thing to still be aware of is fiscal drag. The tax thresholds will remain frozen until at least 2028, so they won’t rise in line with inflation. This means more people pay tax or move into higher tax brackets as their income rises. This will, of course, impact borrowers as they may need to take into account a higher tax bill when working out their affordability.
Using a mortgage calculator may be able to give you a rough idea of how much you can borrow, based on your gross (before tax) income and deposit size. However, if you’re soon to be dragged into a higher tax bracket, you’ll need to think about how this might impact your overall affordability and day-to-day disposable income.
Changes to ISAs
Rumours swirled ahead of the Spring Statement that the Chancellor may announce changes to individual savings accounts (ISAs). It was thought that the Chancellor may try to encourage investing by encouraging Brits to select stocks and shares ISAs.
Currently, individuals can deposit up to £20,000 into an ISA, and any gains generated are tax-free. There’s talk in the industry that the maximum amount you can pay into a cash ISA may be cut from £20,000 down to as low as £4,000. Lenders are already weighing in on this, with Tom Riley, director of retail products at Nationwide, stating that limiting cash ISAs could have a knock-on impact on first-time buyers as financial organisations use the deposits to fund key mortgage products.
Spring Statement update: No changes to ISAs were announced. However, changes in the future can't be discounted. In the accompanying document the government states: "The government is looking at options for reforms to Individual Savings Accounts that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission. Alongside this, the government is working closely with the Financial Conduct Authority to deliver a system of targeted support to give people the confidence to invest."
What about Lifetime ISAs?
The spotlight was also on Lifetime ISAs - a real benefit for first-time home buyers looking to supercharge their savings. First-time buyers currently face a withdrawal penalty if they use a Lifetime ISA to purchase a property that exceeds £450,000 though, with house prices booming, many suggest this price cap is far too high.
Spring Statement update: Rachel Reeves did not announce a reduction in the withdrawal penalty or property price threshold. If this changes in the future, this could be a cause for celebration for first-time buyers looking to step onto the property ladder in pricier regions.
Inheritance tax changes
Inheritance Tax is currently charged at 40% on any portion of an estate worth over £325,000. Individuals are, however, exempt from paying tax on any gifts, provided that the giver survives for seven years after the gift is given. You’re also able to give a total of £3,000 worth of gifts free of Inheritance Tax.
There were some changes to Inheritance Tax in the Autumn 2025 budget, focusing on business property relief and agricultural property relief. However, there was some suggestions that broader changes to Inheritance Tax may be on the horizon in the future.
For example, some suggested the Chancellor could eventually decide to limit how much a person can gift tax-free, regardless of how long they live afterwards. For potential housebuyers relying on gifted deposits from family, having to pay tax on significant sums of money could have a big impact on their ultimate deposit size and affordability.
Spring Statement update: No changes to Inheritance Tax was announced in the 2025 Spring Statement.
The Inheritance Tax allowance remains frozen until 2030. If the Government decides to extend the freeze further in the future, though, even more people may end up paying tax on inherited estates and assets as property values naturally rise above the cap. This could be a knock to families hoping to use inheritance to help them reach their homeownership goals.
2025 - the year of mortgage renewals?
Experts are predicting a significant rise in mortgages up for renewal this year. It may now perhaps be more favourable for some borrowers to switch providers when their two and five-year fixed-rate deals come to an end which could trigger a rise in remortgages versus customers choosing to stick with their current lender.
Many customers locked in their rate on a slightly longer fixed deal to secure favourable rates back in 2020, when the average interest rate for five-year fixed-rate mortgages was 1.66% (March 2020). While customers coming to the end of their fixed-rate deal will likely still face much higher monthly repayments, rates have slowly started to come down compared to a couple of years ago.
Interest rates were generally much higher in 2023 (4.74% for a two-year fixed-rate mortgage on average in March 2023) resulting in many homeowners locking in a shorter-term fixed deal in the hope that rates might fall. These two-year fixed-rate customers will now be looking for a new deal, and may even be able to secure one at a lower interest rate.
We can’t say for certain how mortgage rates will change throughout the year, though as there were no major changes announced in the Spring Statement 2025 experts are not expecting it to have a substantial impact on mortgage rates in the immediate future.
If you’re still feeling uncertain about the current market rates and how changing interest rates could impact your monthly repayments, you may find it helpful to speak to a mortgage broker. They can help you work out whether fixing now could be a good option for you.

Get ready for upcoming changes
Legislative changes, such as the ones due to kick in from April onwards, can feel unsettling - particularly if you’re a first-time buyer or coming to the end of a fixed-rate deal.
Speaking with a mortgage broker can help you to review your finances and assess your mortgage options. By comparing hundreds of different deals with an expert, you’ll have peace of mind that you’re applying for the right mortgage option for you and your circumstances.
Author - John Fraser-Tucker Editor - Stuart Bowman
Last reviewed on 27th March 2025