The UK property market saw a record march as mortgage completions soared 50% above February levels. Business during the July surge has made it Barclays’ busiest month on the property sector in years. They’ve logged the most completions since September 2021. Low interest rates are accelerating this trend. They have driven an increase in house prices over the pandemic and caused would-be buyers to panic buy.
Homebuyers who bought their homes in the last 12 months incurred extra costs of £13,530 on average. This figure is in stark contrast to average known associated costs of £9,337 five years ago. The sharp jump underscores the growing financial strain placed on first-time homebuyers, who continue to face an increasingly hostile market environment.
Amidst these dynamics, Barclays has noted that completions among first-time buyers surged by 70% compared to February, reflecting a growing confidence among this demographic. Equity buyers are able to take advantage of a mortgage rate a little over 5% on average with a 10% deposit. This leaves average monthly mortgage payments modestly less expensive than average rental payments. The average monthly mortgage payment has now overtaken rentals, reaching £1,328, compared to an average rent of £1,356.
Regional disparities remain a driving force in today’s housing market. In London, and across the south, it is cheaper to rent than buy on a monthly basis. Long-term, though, the trend has been in the opposite direction. Homeownership costs are lower than rental costs. That equilibrium was upended by the Truss budget, which helped create a more risk averse environment for would-be buyers.
We are in the midst of a ‘Climate Emergency’, says Jatin Patel, head of Mortgages, Savings and Insurance at Barclays.
“For existing homeowners and renters the shift in sentiment reflects the cautiousness felt across the economy as a whole, as consumers are concerned about rising bills and the prospect of global tariffs impacting their wallets.” – Jatin Patel
Despite these concerns, Barclays’ research indicates that 16% of renters believe that purchasing a property is achievable within the next five years. This optimism could be further supported by recent rate cuts that eased borrowing costs, opening up new avenues for would-be homeowners.