Remortgaging costs set to rise an average of £3,972 YoY – Barclays – London Wallet

Data from Barclays Property Insights shows that rent and mortgage spending increased 4.6% year-on-year in May, below the 5.2% recorded in April, and marking the third consecutive month that growth has slowed. However, those nearing the end of five-year fixed-rate mortgages are anticipating increased costs as they roll off onto comparatively higher rates.

Meanwhile, spending on utilities rose 4.4%, the first recorded rise in over a year, likely due to the energy price cap changes that came into effect on 1 April.

Three in 10 (29%) mortgage holders report they either have or will be remortgaging in 2025. Of this group, more than seven in 10 (72%) predict that their repayments will rise after remortgaging, estimating they will pay an extra £331 per month on average, the equivalent of £3,972 per year.

Given what has happened to interest rates over the past five years, not all of those remortgaging in 2025 will be impacted in the same way. Those who took out five-year fixes in 2020 will likely be rolling off onto comparatively higher rates, whereas those approaching the end of a two-year fix may see a reduction in repayments.

Following the Bank of England’s recent rate reduction, over a third – 35% – of those remortgaging this year are considering transitioning to a longer fixed-rate deal when they remortgage. Others, perhaps expecting further rate cuts in the short-to-medium term, would prefer more flexibility. A quarter – 25% – would now consider a Standard Variable Rate (SVR) and 7% are looking for a tracker mortgage.

Over four in 10 – 44% – renters see a deposit as one of the biggest barriers to owning a home, with a fifth – 22% – of those saving setting aside an average of £254.90 each month.

Across all age groups, renters anticipate it will take 4.5 years to accrue their deposit. Gen Z, who are saving an average of £191 per month, are the demographic who expect to build their deposit fastest, at 3.9 years on average. Millennials, who are perhaps more established in their careers, are leading the charge with the amount set aside, averaging £313 per month, and expecting to be able to buy after 4.7 years. Just over one in six – 17% – are not saving a set amount, instead putting money aside as and when they are able.

To build a deposit, renters are using a combination of reducing their outgoings and seeking extra income. Half – 51% – cite cutting back on day-to-day discretionary spending, and over two fifths – 45% – are going on fewer holidays. Meanwhile, 31% have taken on extra work and 40 per cent report starting a ‘side hustle’.

Nearly a quarter – 23% – of renters are confident that they’ll own a home in their lifetime, and a fifth – 18% – believe it is attainable within the next five years. Those who think ownership is on the cards anticipate making their first house purchase by age 38, on average. However, that represents a gap of 10 years compared to current homeowners, who report being 28 on average when they made their first purchase.

Meanwhile, there remains a feeling that home ownership is not achievable on one’s own – six in 10 renters – 58% – say that buying a home would be impossible without an inheritance or loan from family.

Nearly a tenth of UK adults – 9% – ay they have made an offer on a property in the last 12 months, offering on average almost £4,000 (£3,898) less than the price listed by the estate agent. In total, two thirds – 65% – said they offered under the asking price, while a quarter – 25% – made an offer over asking.

On the other hand, those in the process of selling or who have sold a home in the last 12 months – 4% – are accepting an average of £6,818 under the listing price. This suggests that buyers could be negotiating harder, although not all sellers are willing to budge – one in seven – 15% – say they would not entertain offers under the asking price.

Jatin Patel, head of Mortgages, Savings and Insurance at Barclays, said: “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, 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.”

Will Hobbs, MD, Barclays Private Bank and Wealth Management, added: “We remain a little more upbeat on the UK’s economic outlook than many. 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.”