Renters lose confidence in UK housing market as mortgage and rent spending increases

Renters are being squeezed by rising bills, resulting in a loss of confidence in the housing market.

Rooftops of terraced houses
(Image credit: Bloomberg Creative via Getty Images)

Spending on rent and mortgages grew by 5.2% in the year to July 2025 while spending on utilities increased by 2.2% in the same period, according to new data from Barclays.

As fixed housing and utility costs rise faster than inflation, which the ONS reported as 3.6% in June, consumers are seeing more of their disposable income diverted away from savings in order to meet higher costs.

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Increasingly high house prices and housing costs have ultimately led to renters losing confidence in the property market – just 17% of renters were actively building a house deposit in July, down from 31% in January.

He said: “The UK economy remains in a better place than the public debate would suggest. While there is, as usual, much to worry about, the fact that real (inflation adjusted) household incomes continue to grow briskly remains an important positive, as is the still substantial arsenal of ‘excess’ savings.”

He suggested the key to “unlocking this pent-up spending power” is confidence in the economy.

Mortgage payers are able to stomach cost increases more than renters

In response to repeated interest rate cuts since July 2024 by the Bank of England, more than half of all consumers now believe that renting a home is more expensive than paying a mortgage, Barclays found.

Housing costs are also disproportionately eating into the incomes of renters as housing accounts for 30.8% of renters’ take-home pay, compared to 26.6% of a homeowner’s.

As a result, Barclays found that just over a quarter (26.6%) of renters say they are currently struggling to afford their monthly housing costs, compared to just 15% of homeowners who feel the same way.

Jatin Patel, head of mortgages, savings and insurance at Barclays, said that while many dream of owning a home, “renters are finding it ever harder to save for a deposit while keeping up with rising costs.”

There is, however, some hope. Patel said: “We’re still seeing savers create strong habits, and carefully consider the balance between getting into the market quickly with a lower deposit or trying to minimise monthly repayments in the longer term.”

Daniel is a digital journalist at Moneyweek and enjoys writing about personal finance, economics, and politics. He previously worked at The Economist in their Audience team.

Daniel studied History at Emmanuel College, Cambridge and specialised in the history of political thought. In his free time, he likes reading, listening to music, and cooking overambitious meals.