Mortgage and rental spending increased 2.0% year-on-year in January, up from 1.8% in December, according to the latest Barclays Property Insights report.
Despite the rise in costs, 52% of consumers reported unchanged confidence in their ability to make housing payments.
The report also found that concerns about rising interest rates eased slightly in anticipation of the Bank of England’s recent base rate cut to 4.5%, with 61% of consumers citing it as a worry, down from 62% the previous month.
HOUSING MARKET CONFIDENCE HITS SIX-MONTH LOW
Confidence in the UK housing market has fallen to its lowest level in six months, with 24% of consumers optimistic about market conditions. Rising property prices and upcoming stamp duty changes have been cited as key concerns for prospective buyers.
Among renters, 51% identified house prices as the main barrier to homeownership, an 11 percentage point increasefrom December. Additionally, 44% said that saving for a deposit remains a challenge, up from 37% the previous month.
Despite affordability concerns, 23% of renters believe they will be able to buy a home within the next five years, and 31% are actively saving for a deposit.
DEMAND FOR NEW BUILD HOMES
As confidence in the broader housing market declines, demand for new build properties is growing. The report found that 65% of UK adults believe more housebuilding is necessary to address supply shortages, while 42% say that new developments bring wider economic benefits to communities.
Over 42% of consumers would consider purchasing a new build home, rising to 52% of 18–34-year-olds. Younger buyers are also more likely to see new builds as better value for money, with 34% of those aged 18–34 holding this view compared to just 11% of those over 55.
ENERGY EFFICIENCY AND HOME IMPROVEMENTS
Spending on utilities fell 10.1% in January, as both renters and homeowners look for ways to cut costs.
- 28% of homeowners are making energy efficiency upgrades to their properties.
- 21% of renters are considering moving to a more energy-efficient home to reduce their bills.
Despite the recent rise in Ofgem’s energy price cap, homeowners are increasingly looking to reduce long-term costs by making sustainability improvements to their properties.
MORTGAGE RATE EXPECTATIONS
While the Bank of England’s base rate has now fallen from 5.25% to 4.5%, many borrowers are yet to see any reduction in their monthly repayments.
According to the report:
- 72% of mortgage holders are on a fixed-rate deal, meaning their payments will only change when their term ends.
- 14% of borrowers have remortgaged in the past year, with 59% of them reporting an increase in monthly repayments.
- On average, those moving onto new rates are paying an extra £243 per month (£2,912 per year).
This rise is largely due to the expiry of older fixed-rate deals that were taken out before mid-2022, when mortgage rates were significantly lower. However, 10% of recent remortgagers reported a decrease in their monthly payments, most likely due to securing a lower rate after a short-term deal.
OUTLOOK FOR 2025
Sian McIntyre, managing director of mortgages and savings at Barclays, said the report shows a mixed picture of resilience and affordability challenges.
“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. This month’s reduction in the base rate was a further signal that we’re headed in the right direction.
“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 increase 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.”
