The latest data from Barclays shows that rent and mortgage spending increased 5.2% year-on-year in April, down slightly from 5.4% in March, as many lenders reduced mortgage rates.
Confidence in household finances remained consistent month-on-month at 70%, 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%, amid speculation that the Bank of England will cut the Base Rate this week 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%, from 63% in March.
In an effort to reduce the impact of interest payments on home loans, one in four (23%) 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.
Homeownership confidence increases as rates fall
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%) cited it as a possibility, compared to 15% in March.
The proportion of renters who see obtaining a mortgage as a barrier to owning a home also fell (18% vs 21% 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%) doing so in April, compared to just over two in 10 (22%) in March.
Council tax conundrum for second homeowners
Three in 10 (30%) 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% now can be charged on second homes, impacting the 7% 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%) say they will explore selling their additional property.
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 4%, and a lower energy price cap on the horizon, there are positives to be found amongst current market turbulence.”
Will Hobbs, managing director of Barclays Private Bank and Wealth Management, added: “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.”
