Housing market steady as borrowers await Bank of England decision
Spending on rent and mortgage payments rose by 5.2% in April compared to the previous year, with the pace of growth down slightly from March’s 5.4%, reflecting recent rate reductions by mortgage lenders.
Figures from the latest Barclays Property Insights also showed household sentiment held steady month-on-month, with 70% of respondents expressing confidence in their finances.
Among mortgage holders, one in four reported making regular overpayments, aiming to shorten the life of their loan. These extra payments averaged £221 monthly, or £2,647 annually, with homeowners estimating they could cut their mortgage term by four years.
Confidence in the property market remained unchanged from March, at 29%, ahead of the Bank of England’s interest rate decision tomorrow. Though interest rates are still a concern, the proportion of consumers worried about them dropped to 61% in April, down from 63% the month before.
Overpayments emerge as strategy amid uncertainty
Amid expectations of further rate reductions, many mortgage borrowers are trying to reduce long-term costs. Barclays reported that nearly a quarter of mortgage customers are making additional payments to manage interest exposure.
“Mortgage demand remains resilient, with encouraging signs that young renters feel more confident about entering the property market, despite high interest rates and an uncertain economic landscape,” said Jatin Patel (pictured left), head of mortgages, savings and insurance at Barclays.
“For mortgage holders fortunate enough to be able to make overpayments, it can be a great way to reduce the length of your loan term, or minimise the impact of possible rate shocks coming after a lower fixed deal.”
Council tax pressures affect second homeowners
Rising housing-related costs also continue to hit homeowners. Three in 10 respondents who reported higher housing costs over the past year pointed to council tax as the primary factor. From April, local authorities have been allowed to apply council tax premiums of up to 100% on second homes.
This policy affects about 7% of homeowners surveyed, with average expected bill increases of £840 per year. In response, 35% of second homeowners said they are considering selling their additional properties.
Renters show greater optimism on homeownership
Despite increased stamp duty thresholds, more renters are expressing confidence in buying a home. In April, 20% said they believe homeownership is achievable within five years, up from 15% in March.
The proportion of renters citing mortgage access as a hurdle also declined — from 21% to 18% — as several mainstream lenders introduced lower interest rates during the month. Additionally, more renters are saving for a deposit: 27% in April, up from 22% the month before.
“The UK economy’s cyclical pulse has been strengthening a little in the last few months,” said Will Hobbs (pictured right), managing director at Barclays Private Bank and Wealth Management. “Household incomes have continued to grow faster than inflation and that has been showing up in consumption.
“The uncertainty created by the US tariffs will certainly have some dampening effect. However, there are potential offsets in the form of lower energy prices and the dramatic changes happening in Europe. The latest read on inflation suggests a little more flexibility for the Bank of England too, ahead of tomorrow’s decision.”
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