Barclays revealed that deposits of less than £20,000 accounted for 22.1% of first-time buyer transactions in October, up from 13.5% a year earlier.
Barclays’ latest Property Insights report finds an increasing number of first-time buyers are beating cost-of-living pressures by taking out mortgages with lower deposits.
First-time buyers accounted for 36% of the bank’s mortgages in the past 12 months, but this points to “growing demand for external support”.
Half of renters (49%) said it would be impossible to buy a home without a guarantor or family-backed mortgage, up from 42% in September.
Six in 10 people said they would need a financial incentive or home purchase support package to buy a property, up from 51% in September.
The report also showed that confidence in the UK housing market fell to 24% in October from 27% in September, hitting the lowest level since January this year, when confidence was also 24%.
Views on household finances remain generally positive at 63%, but fell 11% month-on-month.
Meanwhile, 37% of consumers believe they can afford to move within the next 12 months if they choose to.
Among homeowners, this rises to 46%, who cite manageable housing costs and bills (49%) as the main reason for optimism.
This is followed by income and employment security (27%) and being able to sell property at a good price (26%).
In contrast, only 22% of renters believe they can afford to move (buy or continue to rent) within the next 12 months.
The cost of living was cited as the biggest barrier to confidence (38%), followed by the ability to save (34%) and the high cost of renting (32%).
Only 4% cited recent or upcoming government policy changes as a factor in low confidence.
Barclays data showed that mortgage and rental expenditures increased by 5.1% year-on-year in October, which was the same as the Bank of England’s base interest rate in October.
In response to rising costs, 38% said they are cutting back on small luxuries, while 26% are cutting back on basic expenses like groceries.
The report also found that when the Tenants’ Bill of Rights comes into force at the end of October, 33% believe it will improve conditions and protections for tenants, and 28% believe it will make it easier to challenge unfair treatment by landlords.
However, 24% are concerned that the bill could drive up rents due to restrictions on evictions and bidding wars, which could lead to landlords raising listing prices.
But the proportion worried about rent increases dropped to 16% in October from 18% in September.
Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Growing interest in low deposit mortgages shows that getting on the property ladder remains a priority for renters.”
“It also highlights how industry innovations such as home-backed mortgages and support schemes are vital to helping more people achieve their goal of home ownership responsibly.”
“While overall confidence in the housing market has weakened, demand for housing remains strong. The turmoil of the past few years has slightly changed the mindset of consumers, who view housing as no longer a ‘rite of passage’ but is still considered an important financial milestone for long-term stability.”
Julien Lafargue, chief market strategist at Barclays, also said: “With less than a week to go before the autumn budget and growing expectations that the Bank of England will cut interest rates again in December, the UK housing market appears poised to accelerate again after a period of stagnation.”
“That said, in addition to increased economic visibility and modest interest rate declines, the data shows that addressing affordability challenges should remain a key priority.”
Earlier this month, Barclays announced it would increase its maximum loan-to-income ratio (LTI) to six times revenue.
