Barclays has issued a crucial alert to millions of its customers, urging them to brace themselves for increased borrowing expenses in the coming year. The warning follows the bank's latest major mortgage report, which highlights significant shifts in the property market.
First-Time Buyers and the Deposit Challenge
Recent data from the high street bank reveals a notable trend among new entrants to the housing market. In December, 22 per cent of first-time buyers managed to purchase a home with a deposit of less than £20,000. This figure marks an increase of eight percentage points compared to the same period the previous year.
Jatin Patel, who leads Mortgages, Savings and Insurance at Barclays, commented on the findings. He noted from the bank's Birmingham offices that confidence is starting to stabilise, even as affordability remains a pressure point. "Younger buyers, especially those from Generation Z, are highly driven to secure their first home," Patel stated. "Lenders are responding to this demand with innovative products that can increase borrowing potential."
The 2026 Remortgaging Cliff Edge
A significant portion of existing homeowners are set to feel a financial pinch. The report indicates that 22 per cent of current mortgage holders anticipate needing to remortgage during 2026. Among this group, nearly two out of three expect their monthly repayments to rise, primarily as they reach the end of popular five-year fixed-rate deals secured in 2021.
Patel emphasised the need for proactive planning. "Many are preparing for higher costs, which is leading to a renewed focus on budgeting, saving, and long-term financial strategy," he explained. He advised households to consider building emergency funds, exploring remortgage options, and investing in home improvements to boost energy efficiency.
Expert Insights on Market Barriers and Economic Outlook
Mark Harris, Chief Executive of mortgage brokerage SPF Private Clients, highlighted the ongoing struggle to save for a deposit. "The biggest hurdle for first-time buyers remains accumulating that initial lump sum, particularly in high-value regions like London and the South East," Harris said. He pointed out that wage growth lags behind both property prices and rising rents, making it exceedingly difficult for those without family support to save quickly enough.
"Lenders are helping by offering more mortgages at higher loan-to-values with competitive rates," Harris added. "This is vital, as the high cost of living makes saving large sums a challenge. Having the option of a smaller deposit is key to making ownership more accessible."
Providing a broader economic perspective, Julien Lafargue, Chief Market Strategist at Barclays, offered a cautiously optimistic view. "The UK economy is in a slow but real recovery phase, with previous budget uncertainties now fading," Lafargue remarked. He expressed optimism for the first half of 2026 but cautioned that a recent uptick in the unemployment rate requires close monitoring. He concluded that expected further interest rate reductions should help overcome this economic headwind.
