May’s property market saw growth in rent and mortgage spending slow for the third month in succession. Elsewhere, minds are drawn to remortgaging, with many homeowners anticipating higher costs.
Spending slows for the third time in succession
Newly released data from Barclays Property Insights shows that spending on rent and mortgage spending increased 4.6% year-on-year in May. That new figure represents a fall from the 5.2% seen in April, itself a slight fall from March 2025’s figure of 5.4%.
Confidence has improved, but only a touch
In May, confidence in the UK housing market improved marginally, moving from April’s figure of 29% to 30%, a slight improvement that comes amid the Bank of England’s decision to drop the base rate to 4.25%. This is the second time it has cut interest rates in 2025, and the cut is not expected to be the last of 2025.
Speaking about this, Will Hobbs, Managing Director, Barclays Private Bank and Wealth Management, said: “We remain a little more upbeat on the UK’s economic outlook than many. That more optimistic tilt rests on the aggregate balance sheet strength of the UK’s households as well as still brisk real wage growth for those in work. Unemployment is low and this latest hump in inflation is unevenly fading, which should allow interest rates to continue to trickle lower in the quarters ahead.”
Bank of England’s rate drop has homeowners considering remortgaging
Following the Bank of England’s recent rate reduction, and with many economists reporting further planned cuts, over a third of those remortgaging this year (35%) are considering transitioning to a longer fixed-rate deal when they remortgage.
Mindful of those further potential cuts, a quarter (25%) are looking for flexible options with a Standard Variable Rate (SVR) and 7% are targeting a tracker mortgage.
Speaking about this, Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, said: “Homeowners remortgaging this summer are preparing for an increase in their monthly repayments as they transition to higher rates, prompting many to weigh up the certainty of a longer-term fix against the flexibility of variable and tracker products.”
Remortgaging for many will mean higher monthly payments
Though the Bank of England’s rate cuts have some homeowners considering their options, for others, the outlook is very different. This is particularly the case for those who are coming off mortgage rates that were agreed four or five years earlier, when rates were historically low. For those homeowners, their monthly costs are almost certain to rise, and many have already baked this in to their thinking.
According to newly published Barclays’ research, 29% of mortgage holders have said that they either have or will be remortgaging in 2025, and, of this group, more than seven in 10 (72%) predict that their repayments will rise after remortgaging.
When asked how much, the estimates come in at an extra £331 per month on average, the equivalent of £3,972 per year.
Some remortgagers will have cause for celebration, with those who are coming off two-year fixed-rate deals, deals which would have been agreed after interest rates hit a 15-year-high of 5.25% in August 2023, set to enjoy a monthly saving.
“Homeowners remortgaging this summer are preparing for an increase in their monthly repayments as they transition to higher rates, prompting many to weigh up the certainty of a longer-term fix against the flexibility of variable and tracker products.”
Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays
Spending on utilities rises as cap comes off
While spending on rent and mortgages might have slowed, spending on utilities increased by 4.4% in May. That increase represents the first recorded rise in over a year, likely due to the energy price cap changes that came into effect on April 1.
For guidance on how to buy your first home, visit our dedicated section on the Barclays website.
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