Consumers’ confidence in their ability to afford rent and mortgage payments remained unchanged.
The latest Barclays Property Insights report has revealed that rent and mortgage spending increased slightly to 2.0% year-on-year in January.
However, despite this increase, confidence among consumers in their ability to meet rent and mortgage payments held at 52%. Anticipating the Bank of England’s recent decision to cut the Base Rate, consumer concerns around rising interest rates dipped slightly to 61%, down from 62% in December.
Confidence in the UK’s housing market reached a six-month low of 24% as buyers contend with rising housing prices and upcoming stamp duty changes. 51% of renters reported property prices as a main barrier to owning a home, up by 11% from December. Similarly, 44% see the cost of a deposit as a major blocker, up from 37% in December.
However, renters are still hopeful despite rising costs, with 23% believing that home ownership is within their reach within the next five years, with three in 10 currently saving for a deposit (31%).
Young buyers eye up new builds
Despite declining confidence in the housing market, many are still hopeful that housebuilding is the solution. 65% believe that new builds are necessary to provide more housing in the UK, and 42% say that new build developments create a halo effect for communities, bringing economic benefits to the area.
42% of UK adults say they would consider buying a new build, rising to 52% of 18–34-year-olds. Compared to those over 55, younger generations are three times more likely to consider new builds better value for money than existing properties (34% of 18-43-year-olds vs 11% of 55+). Regionally, people from Northern Ireland (55%), London (51%), and the West Midlands (46%) would be most willing to buy a new property.
28% of homeowners say they have previously purchased a newly built property. The main factors influencing their decision were: that it was new (51%), desired location (51%), lack of property chain (38%) and modern features (35%).
These sit alongside environmental and economic factors. New homes are perceived as being more energy efficient (24%) as well as more affordable than older properties (20%).
Energy efficiency upgrades
Barclays customer spending on utilities dropped -10.1 per cent in January, despite the recent increase in Ofgem’s energy price cap.
This comes as both renters and homeowners are considering how to make savings. 28% of homeowners say they are updating their homes to increase energy efficiency, whilst 21% of renters are thinking about moving to a more energy-efficient home, to save money on their bills.
Rate expectations
While the Bank of England base rate (4.5%) has fallen from its peak of 5.25%, that doesn’t necessarily mean that individuals’ monthly mortgage repayments are falling. Most mortgage holders surveyed (72%) report being on a fixed rate, which means that their repayments only change when their fixed term comes to an end.
Of those who have remortgaged in the past year (14%), 59% say that their monthly repayments have increased, by an average of £242.70 a month, or £2,912.40 a year. This is likely because they had previously taken out a fixed-rate mortgage before mid-2022 when mortgage rates were lower than they are today. Meanwhile, 10% say their monthly costs are now lower after remortgaging – likely those who took out a shorter-term product during the higher-rate environment.
"The start of 2025 saw a slight increase in mortgage and rental spend, though encouragingly this hasn’t knocked consumers’ confidence in their ability to make payments," explained Sian McIntyre, Managing Director of Mortgages and Savings at Barclays, "This month’s reduction in the base rate was a further signal that we’re headed in the right direction.
Sian added, “Housebuilding is increasingly a focus, with the nation’s outlook on new developments pragmatic, recognising the necessity for new builds as part of the solution to increasing housing supply, as well as the advantages they can bring to both homeowners and communities. Ahead of April’s looming stamp duty changes, prospective buyers will continue to look for ways to pair aspiration and affordability, with energy efficiency a clear priority when choosing the right home.”