Rent and mortgage spending rose by 5.2% year-on-year in July, while utility spending climbed 2.7%, according to Barclays Property Insights.

As living costs continue to rise, renters are experiencing a disproportionate squeeze on their disposable income compared to homeowners, resulting in declining confidence – both in their chances of getting on the property ladder and in the housing market more broadly.

This drop in confidence is particularly pronounced among renters. The number of renters actively saving for a deposit has fallen to a six-month low – just 17% in July, down from 31% in January. House prices have now overtaken the cost of a deposit as the main barrier to homeownership (38% vs 35%).

Nearly two-thirds (62%) of renters have seen or expect to see their rent increase this year, further limiting their ability to save. As a result, only 12% believe homeownership is achievable within the next year. That number increases slightly to 16% over a five-year horizon – still down from 19% in June.

Affordability challenges are also shaping long-term housing choices. Nearly four in ten renters (37%) say they can’t afford to buy in the area where they currently live or want to live in the future. Rising costs are also reducing appetite for ownership itself, with 28% of renters saying they are no longer interested in owning a home – the highest proportion recorded this year.

Deposit saving is at its lowest level of 2025 so far, with fewer than one in five (17%) renters actively putting money aside. Common strategies include cutting back on non-essential spending (14%), limiting holidays (11%), or taking on side hustles to supplement income (8%).

Despite a reduction in interest rates earlier this year, more than half of consumers (55%) believe renting is more expensive than paying a mortgage. That perception rises to 61% among homeowners – many of whom have experienced both scenarios – compared to 42% of renters.

Housing costs continue to eat into income, with renters spending 30.8% of their take-home pay on rent, compared to homeowners, who spend 26.6% on average on their mortgage. Homeowners also tend to earn more, with an average gross income of £37,775 versus £23,562 for renters.

This financial disparity leaves a quarter of renters (26%) struggling to meet their monthly payments, compared with 15% of homeowners. Nearly half (45%) of renters say they’ve had to adjust their spending habits just to keep up with rising housing costs.

In trying to make homeownership more affordable, 45% of prospective buyers say they would prefer to save for a larger deposit to reduce future mortgage repayments. In contrast, only 12% would consider buying with a smaller deposit and facing higher monthly payments. One-third (34%) say they would consider buying a smaller home to reduce borrowing needs.

Still, some are willing to stretch themselves financially. One in seven renters (16%) say they would use all their savings to get on the property ladder – a figure that rises to 20% among millennials.

Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Many people dream to one day own a home, but our latest findings highlight how renters are finding it ever harder to save for a deposit while keeping up with rising costs. More positively though, we’re still seeing savers create strong habits, and consider carefully the balance between getting into the market quickly with a lower deposit or trying to minimise monthly repayments in the longer term

“We’re committed to giving first time buyers the tools they need to get on the property ladder. That’s why we’ve adapted our product range to include new propositions like Mortgage Boost, so that family members can still support first time buyers, even if they don’t have a lump sum that they can gift up front or use with our Family Springboard mortgage.

Will Hobbs, managing director, Barclays Private Bank and Wealth Management, 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.

“The key to unlocking this pent-up spending power is confidence, a difficult factor to measure and to forecast. There is always much that can go wrong in the path ahead, but it was ever thus. Hindsight happily tells us that even the blind optimist has triumphed over the sober pessimist for most of the last several centuries. For the UK’s economic outlook at the moment, the causes for optimism are more substantial than widely acknowledged.”

Reacting to this report, Megan Eighteen, president of ARLA Propertymark (Association of Residential Letting Agents), commented: “In certain regions across the nation, rent levels have shot up to unsustainable levels, and many tenants will be finding that their finances are really being pushed to the limit. Alongside this, the average deposit to purchase a home is around £70,000, so to pay heightened rent, as well as save for a deposit, will be nearly impossible for some.

“It’s really important that we tackle the root causes of these issues head-on. Continued regulatory and financial pressure placed on landlords is pushing some out of the market completely at a time when homes are desperately needed. Investment from reputable and professional landlords is crucial as the private rented sector plays a key role in housing the nation, and this can only be done with the understanding and support of all governments across the UK.”