Homeowners making over-payments worth £2,647 per year to reduce mortgage term
Pace of mortgage and rent spending growth slows in April
Rent and mortgage spending increased by 5.2 per cent year-on-year in April, down slightly from 5.4 per cent in March, amidst widespread rate reductions from lenders
One in four mortgage holders are making loan overpayments, averaging £221 extra per month
Council tax hike for second homeowners is adding an estimated £840 a year to bills
A third of second homeowners have considered selling as a result of the tax changes
Barclays Property Insights combines data from across the Bank with consumer research to provide an in-depth analysis of UK housing trends
Barclays Property Insights data shows rent and mortgage spending increased 5.2 per cent year-on-year in April, down slightly from 5.4 per cent in March, as many lenders reduced mortgage rates. Confidence in household finances remained consistent month-on-month at 70 per cent, while many UK homeowners are taking prudent steps to decrease their mortgage term through overpayments.
Confidence in the UK housing market remained in-line with March 2025 at 29 per cent, amid speculation that the Bank of England will cut the Base Rate on 8 May and mortgage rates will drop further. While research conducted between 18-22 April showed that interest rates remained concerning for consumers, this decreased slightly to 61 per cent, from 63 per cent March.
In an effort to reduce the impact of interest payments on home loans, one in four (23 per cent) mortgage holders are actively making overpayments. These additional payments average £221 per month on top of their regular repayments, or £2,647 per year, with over-payers predicting this will reduce their mortgage term by four years on average.
Council tax conundrum for second homeowners
Three in 10 (30 per cent) of those who have seen a rise in housing costs in the last 12 months cited council tax as the biggest increase1. From the beginning of April, further council tax premiums of up to 100 per cent now can be charged on second homes, impacting the seven per cent of homeowners surveyed who reported owning a second property.
Those affected say their bills are set to rise by £840.10 per year on average. As a result, a third of second homeowners (35 per cent) say they will explore selling their additional property.
Lifetime goals remain achievable
Despite recent increases to stamp duty thresholds impacting the cost of buying, renters’ confidence in their ability to own a home within five years recovered slightly in April. A fifth (20 per cent) cited it as a possibility, compared to 15 per cent in March.
The proportion of renters who see obtaining a mortgage as a barrier to owning a home also fell (18 per cent vs 21 per cent in March), following several high street lenders dropping their mortgage rates last month.
The rise in confidence correlates with an uplift in renters saving for a deposit to buy a home, with almost three in 10 (27 per cent) doing so in April, compared to just over two in 10 (22 per cent) in March.
Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, said: “Mortgage demand remains resilient, with encouraging signs that young renters feel more confident about entering the property market, despite high interest rates and an uncertain economic landscape.
“For mortgage holders fortunate enough to be able to make overpayments, it can be a great way to reduce the length of your loan term, or minimise the impact of possible rate shocks coming after a lower fixed deal. It’s important to always weigh up the cost savings with other financial goals and commitments, as well as potential early repayment fees.
“The Bank of England’s decision on Thursday will determine how optimistic we can be, but with mortgage rates dipping below four per cent, and a lower energy price cap on the horizon, there are positives to be found amongst current market turbulence.”
Will Hobbs, Managing Director, Barclays Private Bank and Wealth Management, said: “The UK economy’s cyclical pulse has been strengthening a little in the last few months. Household incomes have continued to grow faster than inflation and that has been showing up in consumption.
“The uncertainty created by the US tariffs will certainly have some dampening effect. However, there are potential offsets in the form of lower energy prices and the dramatic changes happening in Europe. The latest read on inflation suggests a little more flexibility for the Bank of England too, ahead of tomorrow’s decision.”
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