Barclays' latest mortgage data indicates that first-time buyers in the UK are increasingly turning to low-deposit mortgages. In October, deposits of less than £20,000 accounted for 22.1 percent of first-time buyer completions, a notable increase from 13.5 percent during the same period last year.
The data also shows that property prices and deposit requirements remain the most significant barriers for renters seeking homeownership, with 46 percent and 39 percent respectively citing these as major obstacles. Access to higher loan-to-value mortgages has enabled more first-time buyers to enter the market despite ongoing cost-of-living pressures.
First-time buyers continue to play a substantial role in the housing sector, making up 36 percent of Barclays’ mortgage completions over the past year. The demand for external support is also rising; nearly half of renters (49 percent) say they would be unable to buy a home without a guarantor or family-backed mortgage, up from 42 percent in September. Additionally, 60 percent of renters now report needing financial incentives or support schemes to purchase property, compared with 51 percent in September.
Overall confidence in the UK housing market declined slightly in October, falling three percentage points to 24 percent—the lowest level since January. While sentiment regarding household finances remains relatively positive at 63 percent, it saw an eleven-point drop month-on-month.
Among consumers surveyed, 37 percent expressed confidence in their ability to move home within the next year if desired. This figure rises to 46 percent among homeowners, who attribute their optimism primarily to manageable housing costs and bills (49 percent), security of income and employment (27 percent), and expectations of favorable sale prices (26 percent). In contrast, only 22 percent of renters feel confident about moving within the next twelve months due to cost-of-living concerns (38 percent), difficulties saving for deposits (34 percent), and high rental costs (32 percent).
Barclays reports that spending on mortgages and rent increased by 5.1 percent year-on-year in October as the Bank of England Base Rate remained unchanged. To cope with rising expenses, 38 percent of respondents are reducing discretionary spending while 26 percent are cutting back on essentials such as groceries.
The introduction of the Renters’ Rights Act at the end of October abolished Section 21 no-fault evictions and introduced indefinite periodic tenancies aimed at increasing renter security. Initial responses have been mixed: one-third (33 percent) believe tenant conditions will improve under the new law; however, a quarter worry that restrictions on evictions could drive rents higher.
Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays said: “The increasing appetite for low-deposit mortgages demonstrates that getting on the property ladder remains a priority for renters. It also highlights how industry innovation, such as family-backed mortgages and support schemes, is crucial in helping more people responsibly attain their homeownership goals.”
“Despite overall confidence in the housing market softening, the appetite for homeownership remains strong. The turbulence of the last few years has slightly shifted the consumer mindset, where property is seen less of a ‘rite of passage’, but still considered an important financial milestone for long-term stability.”
Julien Lafargue, Chief Market Strategist at Barclays added: “With less than a week to go to the Autumn Budget and growing expectations that the Bank of England will lower interest rates once more in December, the UK real estate market appears primed to reaccelerate following a period of stagnation. That said, beyond improved economic visibility and slightly lower interest rates, the data shows that addressing the affordability challenge should remain a key priority.”
Barclays offers Mortgage Boost for those ready to buy their first home; this program allows family or friends’ income to help buyers borrow more by joining them on their mortgage application without requiring co-ownership.
For further details about Barclays’ activities and services visit https://home.barclays/.