"For those ready to buy, our data shows that we’re currently in a buyers’ market when it comes to negotiations, with most sellers willing to accept offers under asking in order to facilitate their next move"
- Jatin Patel - Barclays
Consumer spending on rent and mortgage payments rose by 4.6% year-on-year in May, according to new data from Barclays Property Insights. While still increasing, this marks a slowdown from April’s 5.2% rise and continues a three-month trend of decelerating growth in housing costs.
The report highlights the growing financial pressure facing those approaching the end of fixed-rate mortgage deals. Many borrowers, particularly those who fixed in 2020, are bracing for higher repayments as they move onto new rates.
At the same time, utility spending rose by 4.4%, the first recorded increase in over a year. This uptick is likely linked to the energy price cap changes implemented on 1 April.
Among mortgage holders, 29% say they either have or will remortgage in 2025. Of that group, 72% expect their repayments to increase, estimating an average annual rise of £3,972, or £331 per month. The impact varies depending on when the original mortgage deal was taken out, with five-year fixes from 2020 set to roll onto higher rates, while some two-year fixes may actually see lower repayments.
In light of recent rate cuts by the Bank of England, 35% of those remortgaging this year are considering longer-term fixed-rate products. Others are leaning towards flexibility: 25% are open to standard variable rates (SVRs), while 7% are exploring tracker mortgages.
Saving for a deposit
Affordability remains a key concern for renters aiming to buy. 22% of renters are currently saving for a deposit, putting away an average of £254.90 per month. Across all age groups, renters estimate it will take around 4.5 years to save enough.
Gen Z savers expect to reach their goal in 3.9 years despite setting aside a lower monthly average of £191. Millennials are saving more, averaging £313 each month, and project it will take 4.7 years to buy. Meanwhile, 17% of renters saving for a deposit are doing so irregularly, contributing when they can.
To boost savings, 51% of renters say they are cutting back on discretionary spending. Another 45% are going on fewer holidays, 40% have started a side hustle, and 31% have taken on additional work.
A generational divide
Only 23% of renters believe they will eventually own a home, and just 18% think it’s possible within the next five years. Those who do expect to buy believe they’ll make their first purchase by age 38 on average, a full decade later than current homeowners, who bought their first property at 28 on average.
Barriers to ownership persist, with 58% of renters saying they would not be able to buy without financial support such as an inheritance or family loan.
Buyers negotiating harder
Over the past year, 9% of UK adults say they have made an offer on a property, typically bidding £3,898 under the listed price. 65% of buyers offered below asking, while 25% went over.
Sellers, on the other hand, report accepting an average of £6,818 less than their listing price. Although the figures suggest that buyers are gaining ground in negotiations, not all vendors are open to lower bids, 15% say they would reject offers below the asking price.
“Homeowners nearing the end of a five-year fixed-rate mortgage are preparing for an increase in their monthly repayments as they transition to higher rates,” said Jatin Patel, head of mortgages, savings and insurance at Barclays. “This is prompting many to weigh up the certainty of a longer-term fix against the flexibility of a variable or tracker product.
“However, the current interest rate environment has not dampened renters’ appetite for getting on the property ladder, many of whom are taking steps to save enough for a housing deposit. For those ready to buy, our data shows that we’re currently in a buyers’ market when it comes to negotiations, with most sellers willing to accept offers under asking in order to facilitate their next move.”
“We remain a little more upbeat on the UK’s economic outlook than many,” added Will Hobbs, managing director at Barclays Private Bank and Wealth Management. “That more optimistic tilt rests on the aggregate balance sheet strength of the UK’s households as well as still brisk real wage growth for those in work. Unemployment is low, and this latest hump in inflation is unevenly fading, which should allow interest rates to continue to trickle lower in the quarters ahead.”
