Barclays’ Property Insights report found that recent events had put this at the front of people’s minds, as 82% of the people surveyed were worried that conflict in the Middle East would result in higher costs for oil, gas and fuel.
Although the majority of homeowners thought it was important to make their homes greener and save on energy costs, recent or hopeful renovators estimated an average cost of £26,323.80 for works. As a result, 49% of homeowners said they would rather buy a new or recently renovated home to avoid spending on upgrades.
Other homeowners were thinking further ahead, as 47% were worried about the costs of renovating their properties as their homes aged.
This sentiment was most popular among younger people, with 52% of Gen Z respondents saying they would pay extra to buy a new build now over a cheaper older property that would need to be renovated. Just 37% of Gen X respondents felt the same.
Barclays said this aligned with data showing that first-time buyers were opting for forever homes, with new homeowners making up 48.8% of semi-detached or detached house purchases, compared to 18.2% for flats.
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Borrowing for home upgrades
Barclays’ data found that additional borrowing on an existing mortgage made up 11.7% of completions in February, the highest level in a year.
Further, 30% of mortgage holders said they had or planned to increase their borrowing when remortgaging, while 22% had or planned to release equity from their home.
Among those who had increased borrowing or released equity, an average of £47,524 was borrowed or released. The main reason for doing so was to fund home improvement projects, as said by 40% of respondents.
Some 17% used the money for a large purchase, while 15% supported a family member.
Worries about Middle East conflict’s impact on rates
Barclays also asked respondents about the impact of the US-Iran war on borrowing costs, finding that 37% of homeowners on fixed rate deals expected their mortgage costs to rise in the next few months.
This was dependent on how long the volatility lasts, as only 1% of mortgage holders said their deal would mature in the next month, and 8% said theirs would expire in the next three months.
Some 43% of mortgage holders said they would be able to manage a financial hit, while 54% of homeowners who owned their home outright agreed, as did 31% of renters.
Savers with student loans slower at raising a deposit
Barclays also looked at the difference between the financial resilience of people with a student loan and without, finding that 44% of respondents with a student loan said their repayments made it harder to achieve long-term financial stability.
Some 32% said they never expected to repay their student loan in full and 41% believed repayments were stopping them from getting on the housing ladder.
Among those saving a deposit, people with student loan debt are able to save £310 per month on average, while those without debt managed to put away £473.70 per month. Over a year, this put those without a debt £1,964.40 closer to reaching their savings goal than those with a student loan.
Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Rising external costs are reshaping how the UK approaches homeownership. Student loan repayments are slowing deposit saving for many aspiring buyers, while volatile energy prices are forcing households to think much harder about the long-term running costs of their homes. With homeowners unlocking value in their property for upgrades, we’re seeing a clear shift towards investing now to improve future financial resilience.
“Homeowners are understandably concerned about rising fixed rates across the market, but it’s important to remember that there are options available. You can typically lock in a new rate 90 days before your end of term date with your existing lender – or up to six months out if you are looking at moving lenders. This can provide peace of mind for those who want to protect themselves against short-term volatility, whilst planning ahead.”
