Confidence in the UK housing market is improving with Gen Z buyers driving demand for more affordable homes, smaller deposits and higher loan-to-value (LTV) mortgages, Barclays’ latest Property Insights report reveals.

The data shows that 22% of first-time buyers purchased homes with deposits under £20,000 in December 2025, up from 13% a year earlier.

Meanwhile 44% opted for 85- 90% LTV mortgages compared with 41% in December 2024, reflecting lenders’ growing willingness to help buyers access the market with smaller upfront sums.

A third of Gen Z adults now aspire to buy a first home in 2026.

Barclays’ research also highlights the rising optimism among younger buyers. Around a third of Gen Z adults (34%) now aspire to buy a new or first home in 2026 – more than double the national average – and nearly six in 10 have already saved a significant deposit, averaging £19,442.

The findings highlight a shift in the market, where innovative lending, smaller deposits, and high LTV products are helping younger buyers overcome traditional barriers to homeownership.

STABILISING CONFIDENCE

Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Our latest data shows clear signs that confidence in the housing market is beginning to stabilise, despite ongoing affordability pressures.

“Younger buyers, particularly Gen Z, are highly motivated to get on the property ladder and lenders are helping to meet this demand by providing innovative products that increase how much customers can borrow.

“Many existing homeowners are preparing for higher borrowing costs in 2026 as they roll off 5-year fixed-rate deals, prompting a renewed focus on budgeting, saving and longer-term planning.

“Whether it’s building an emergency fund, remortgaging, or investing in home improvements and energy efficiency, households will be taking a more considered and proactive approach to managing their housing costs in 2026.”

BANK OF MUM AND DAD

The report shows that while the Bank of Mum and Dad remains influential – supporting a third of Gen Z buyers – reliance on family assistance is easing.

Just 43% now view inheritance or help as essential, down from 63% at the start of 2025.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “One of the biggest barriers first-time buyers face is raising a deposit, particularly in London and the South East, where property values are higher.

“With wage growth failing to keep pace with property price increases and rising rents, first-time buyers without financial assistance from the Bank of Mum and Dad are not able to save for a deposit fast enough.”

PRICED OUT

He added: “Instead, they find themselves further priced out. While the average first-time buyer deposit is 20%, lenders are doing their bit by offering more choice of mortgage at higher loan-to-values at competitive rates with broader criteria.

“This is important; the higher cost of living, including high rents, means it is hard to save significant sums, particularly for those who don’t have help from the Bank of Mum and Dad. Having the option of raising a smaller deposit is crucial in making home ownership more affordable and accessible.”

REAL RECOVERY

Julien Lafargue, chief market strategist at Barclays, added: “The UK economy continues to recover as the uncertainty surrounding the budget has dissipated.

“The recovery is slow yet real, which keeps us optimistic over the UK economy’s prospects in the first half of 2026.

“That said, the recent upward move in the unemployment rate is worth monitoring closely. But with additional interest rate reductions expected, we believe this headwind can be overcome.”