According to the latest Barclays Property Index, nearly half – 44% – of first-time buyers chose 85-90% loan-to-value (LTV) mortgages in December, which is up from 41% in the same period in the previous year.
The report said the move to smaller deposits and higher LTVs suggests that first-time buyers are “finding it easier to get on the property ladder, as lenders continue to introduce innovative mortgage products to help more people access the market”.
Barclays said the stamp duty changes in April had had an impact on demand at the lower end of the market.
Homes under £300,000 made up 72% of first-time buyer purchases in May 2025, up from 60% in April.
This preference has continued; homes under £300,000 accounted for around 65% of first-time buyer purchases in December 2025 and have averaged 67% since the change in thresholds.
The report added that property prices were cited by 41% and the cost of the deposit was mentioned by 39% as the greatest obstacles in January, which fell to 51% and 44% respectively in December.
Remortgage wave coming
Barclays added that nearly a quarter of mortgage holders expected to remortgage in 2026, with almost two-thirds of this cohort expecting to see a rise in monthly repayments.
Around 39% said they planned to cut back on small luxuries and 29% said they will review their monthly budgets to reduce household bills.
Beyond refinancing, housing remains a key financial focus for many homeowners, with over a third planning housing-related changes in 2026.
Over half – 51% – of homeowners are actively saving for housing-related expenses, including home improvements at 28%, building an emergency fund at 19%, and investing in energy-efficiency upgrades at 9%.
Gen Z more optimistic about housing market
Barclays found that 34% of Gen Z aspire to buy a new or first home in 2026, which is more than double the national average.
The report noted that confidence in the housing market among 18-34-year-olds improved from 33% in January 2025 to 40% in December.
However, affordability is still a “significant barrier”, with 64% of young prospective buyers pointing to high house prices as a hurdle and 61% singling out mortgage rates.
Almost six in 10 Gen Z buyers are planning to buy property in 2026, and on average have accrued £19,442, barring financial assistance or inheritance. This compares to £25,660 among all hopeful adults.
Gen Z adults said they added a further £8,998 to their deposit through this year, which compares to a national average of £11,023.
The Bank of Mum and Dad contributes to 34% of Gen Z buyers, with 43% of Gen Z saying inheritance or financial assistance is essential. This is down from 63% at the start of 2025.
Confidence in housing market is ‘beginning to stabilise’
Jatin Patel, head of mortgages, savings and insurance at Barclays, said the latest data shows “clear signs that confidence in the housing market is beginning to stabilise, despite ongoing affordability pressures”.
He explained: “Younger buyers, particularly Gen Z, are highly motivated to get on the property ladder and lenders are helping to meet this demand by providing innovative products that increase how much customers can borrow.
“Many existing homeowners are preparing for higher borrowing costs in 2026 as they roll off five-year fixed rate deals, prompting a renewed focus on budgeting, saving and longer-term planning. Whether it’s building an emergency fund, remortgaging, or investing in home improvements and energy efficiency, households will be taking a more considered and proactive approach to managing their housing costs in 2026.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said one of the biggest barriers first-time buyers face is raising a deposit, particularly in London and the South East, where property values are higher.
“With wage growth failing to keep pace with property price increases and rising rents, first-time buyers without financial assistance from the Bank of Mum and Dad are not able to save for a deposit fast enough. Instead, they find themselves further priced out.
“While the average first-time buyer deposit is 20%, lenders are doing their bit by offering more choice of mortgage at higher loan to values at competitive rates with broader criteria.
“This is important; the higher cost of living, including high rents, means it is hard to save significant sums, particularly for those who don’t have help from the Bank of Mum and Dad. Having the option of raising a smaller deposit is crucial in making homeownership more affordable and accessible,” he added.
