Share of first-time buyers opting for low-deposit deals rose 8.6% in October
- Barclays mortgage data shows deposits under £20,000 made up 22.1 per cent of first-time buyer completions in October
- 60 per cent of renters say they would require financial incentives or homebuying support schemes to get onto the property ladder
- Confidence in the housing market dipped three percentage points to 24 per cent month-on-month, although sentiment towards household finances remains positive
- Barclays Property Insights analyses proprietary mortgage data alongside consumer research to uncover the key trends shaping the UK housing market
Barclays mortgage data shows that first-time buyers are increasingly overcoming cost-of-living pressures by taking out lower-deposit mortgages. More broadly, consumer confidence in the housing market declined modestly in October, offsetting the tentative optimism around the recent introduction of the Renters’ Rights Act.
Property prices and deposits were the biggest barriers to homeownership reported by renters in October (46 per cent and 39 per cent respectively). Barclays mortgage data shows how first-time buyers have been able to tackle some of these challenges through widened access to higher loan-to-value mortgages. Deposits of less than £20,000 accounted for 22.1 per cent of first-time buyer completions last month, up from 13.5 per cent in the same period in 2024.
First-time buyers remain a significant component of the housing market, despite cost pressures, accounting for 36 per cent of Barclays mortgages over the past 12 months. This comes alongside a growing appetite for external support. Half of renters (49 per cent) say buying a home would be impossible without a guarantor or family-backed mortgage (up from 42 per cent in September). Six in 10 renters (60 per cent) say they would require financial incentives or homebuying support schemes to purchase a property, up from 51 per cent in September.
Modest dip in confidence amidst cost concerns
Confidence in the UK housing market dipped to 24 per cent in October, down from 27 per cent in September and marking the lowest level since January this year (also 24 per cent). Sentiment towards household finances remains broadly positive at 63 per cent but dropped more steeply by 11 percentage points month-on-month.
Nearly four in 10 consumers (37 per cent) feel confident that they could afford to move home in the next 12 months if they wanted to. This rises to 46 per cent amongst homeowners, who cite manageable housing costs and bills (49 per cent) as the primary cause for optimism. This is followed by security of income and employment (27 per cent) and being able to sell their property for a favourable price (26 per cent).
Conversely, only 22 per cent of renters feel confident they could afford to move in the next 12 months (buying or continuing to rent). Cost-of-living is cited as the strongest impediment to confidence (38 per cent), followed by ability to save for a deposit (34 per cent), and the high cost of renting (32 per cent). Just 4 per cent say recent or upcoming government policy changes are a contributing factor to low confidence.
Barclays data shows mortgage and rental spending rose 5.1 per cent year-on-year in October, as the Bank of England Base Rate held in October. In response to rising costs, 38 per cent say they are cutting back on small luxuries, while 26 per cent are reducing essential spending, such as groceries.
Tentative optimism following Renters’ Rights Act
The Renters’ Rights Act came into law at the end of October, abolishing Section 21 no-fault evictions, introducing indefinite periodic tenancies and giving renters more security. Initial reactions have been mixed. A third of renters (33 per cent) believe that the Act will improve conditions and protections for tenants, with 28 per cent confident that it will make it easier to challenge unfair treatment from landlords. However, a quarter of renters (24 per cent) worry the Act could push rents higher due to limitations on evictions and bidding wars, which might cause landlords to increase the listing price. More generally, the percentage concerned about rising rents dropped to 16 per cent in October, down from 18 per cent in September.
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, said: “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.”
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