Growing use of smaller deposits and higher loan-to-value mortgages is helping ease traditional barriers to homeownership with Gen Z showing increasing confidence about buying their first home in 2026, according to Barclays’ latest Property Insights report.
Barclays’ data shows that 22% of first-time buyers completed purchases with deposits below £20,000 in December 2025, up from 13% a year earlier.
At the same time, appetite for higher LTV borrowing increased, with 44% of first-time buyers opting for 85- 90% LTV mortgages, compared with 41% in December 2024.
The shift reflects sustained demand for more affordable homes and growing lender support for buyers with smaller deposits.
CONSISTENT TREND
Homes priced below £300,000 accounted for around two-thirds of first-time buyer purchases in December, a trend that has remained consistent since changes to stamp duty thresholds in April 2025.
Alongside these structural changes, buyer sentiment among younger adults is improving.
Barclays’ consumer research shows that 34% of Gen Z adults hope to buy a new or first home in 2026 – more than double the national average.
Nearly six in 10 of those planning to buy have already saved what they consider a significant deposit, averaging £19,442.
CONFIDENCE STABILISING
Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, says: “Our latest data shows clear signs that confidence in the housing market is beginning to stabilise, despite ongoing affordability pressures.
“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 5-year fixed-rate deals, prompting a renewed focus on budgeting, saving and longer-term planning.
“Households will be taking a more considered approach to housing costs in 2026.”
“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.”
While the Bank of Mum and Dad continues to play a role – supporting 34% of recent Gen Z buyers – perceptions around the need for family assistance appear to be easing.
Four in 10 Gen Z respondents now say inheritance or financial support is essential, down from 63% at the start of 2025.
PRICED OUT
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “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.
“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 home ownership more affordable and accessible.”
