Rent and mortgage spending grew 4.3% year-on-year in June, marking the fourth month that growth has slowed, as major lenders continue to lower mortgage rates, the latest data from Barclays shows.
Consumer confidence in the UK housing market fell 3 points to 27%, as the Bank of England maintained the Base Rate at 4.25%. Offsetting this, concerns around the barriers to home ownership are easing – 39% of consumers cited property prices as one of the major barriers in June (down 6 points from May) and 19% cited monthly mortgage payments (down 3 points), as major lenders continue to lower mortgage rates.
Rental payments hindering deposit saving
A fifth (22%) of renters are currently saving for a house deposit, with this group aiming to accrue just over £30,000 in 4.8 years, on average, from the time they started saving.
To meet this target, over £500 per month (£526.86) would need to be saved, on average, not accounting for interest or inflation. However, renters are putting away less than half the monthly goal (£230.80 per month on average), suggesting the target timeline could be over-optimistic for many without a change in financial circumstances.
Across all age groups, nearly half (49%) of tenants believe it is more expensive to be a renter than a mortgage-payer, and renters are nearly three times more likely to say they struggle with their housing costs compared to homeowners (25% vs 9%).
However, not all renters are looking to get onto the property ladder for the first time – a fifth (22%) report having previously owned a home, including four in 10 ‘later-life’ renters over the age of 55. Renters aged 55+ are more likely to say they prefer renting as it offers more flexibility for their current life stage (56% vs national average of 40%).
Government-backed ownership schemes face awareness challenges
Half (53%) of renters believe homeownership would be impossible without the help of financial incentives and homebuying support schemes. Despite this, awareness of the government-backed shared ownership initiative is relatively low. Three in 10 (31%) consumers haven’t heard of the scheme, with the figure even higher among 18–34-year-olds (39%).
However, those familiar with the scheme see the benefits. A third (34%) believe shared ownership offers a more affordable route to getting on the property ladder compared to a traditional mortgage, and one in five (19%) believe that these types of initiatives offer a solution for first-time buyers struggling to get on the housing ladder.
Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Our latest insights reflect a housing market in transition. While lower mortgage rates are providing some relief, affordability remains a challenge.
“Our findings underscore the importance of tailored solutions to address the diverse needs of today’s prospective homeowners. While half of renters view homeownership as unattainable without financial support schemes, there remains a significant gap in awareness of initiatives like shared ownership, particularly among younger adults.
“Bridging this knowledge gap is crucial to empowering first-time buyers and fostering greater accessibility to the property market.”
Will Hobbs, managing director of Barclays Private Bank and Wealth Management, said: “Data on the economy are telling a particularly incoherent story at the moment. We maintain that the starting point for the UK’s economy is better than widely acknowledged. Household balance sheets are more robust in aggregate and the corporate sector is potentially well placed to benefit from the incoming industrial revolution in machine learning and generative AI.
"The news of the world around us remains unsettling, but it is important to remember that the economy is capable of dancing to a quite different tune. Blind optimism ultimately outperforms sober pessimism when it comes to the economy over longer periods of time, primarily because the march of technological change.”
