Deposits under £20,000 made up 22.1% of new buyer completions in October, up from 13.5% in the same period last year, Barclays reveals.
The latest property insight from Barclays shows that first-time buyers are increasingly overcoming 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 it shows there is a “growing need for external support”.
Half of renters (49%) say buying a home would be impossible without a guarantor or family-backed mortgage, up from 42% in September.
Six in 10 say they need financial incentives or home-buying assistance programs to purchase a home, up from 51% in September.
The report also shows that confidence in the UK housing market fell to 24% in October, down from 27% in September and the lowest level since January this year, when it was also at 24%.
Sentiment towards household finances remains generally positive at 63%, but fell by 11% month-on-month.
Meanwhile, 37% of consumers are confident they can afford to move in the next twelve months if they want to.
This rises to 46% among homeowners, who cite manageable housing costs and bills (49%) as their top reason for optimism.
This is followed by security of income and employment (27%) and being able to sell their property for a favorable price (26%).
Conversely, only 22% of renters are confident they can afford to move (buy or continue to rent) in the next twelve months.
The cost of living is cited as the biggest barrier to confidence (38%), followed by the ability to save for a down payment (34%) and the high cost of rent (32%).
Only 4% say recent or upcoming changes in government policy contribute to low trust.
Data from Barclays shows mortgage and rental spending rose 5.1% year on year in October, as the Bank of England’s base rate held steady in October.
In response to rising costs, 38% say they are cutting back on small luxuries, while 26% are reducing essential expenses such as groceries.
The report also shows that after the Renters’ Rights Act came into force at the end of October, 33% believe it will improve conditions and protections for renters, while 28% believe it will make it easier to challenge unfair treatment by landlords.
However, 24% fear the law will increase rents due to restrictions on evictions and bidding wars, which could allow landlords to increase sales prices.
But the percentage concerned about rising rents fell from 18% in September to 16% in October.
Barclays head of mortgages, savings and insurance Jatin Patel said: “Increasing demand for low deposit mortgages shows that getting on the property ladder remains a priority for tenants.”
“It also highlights how innovation in the sector, such as family-backed mortgages and support schemes, is crucial to helping more people responsibly achieve their home ownership goals.”
“Despite general confidence in the weakening housing market, demand for homeownership remains strong. The turbulence of recent years has somewhat changed consumer mindsets, with real estate seen less as a ‘rite of passage’ and still viewed as an important financial milestone for long-term stability.”
Julien Lafargue, chief market strategist at Barclays, added: “With less than a week to go until the autumn budget and growing expectations that the Bank of England will cut rates again in December, the UK property market looks set to accelerate again after a period of stagnation.”
“That said, beyond better economic insight and slightly lower interest rates, the data shows that addressing affordability issues should remain a top priority.”
Earlier this month, Barclays announced it would increase its maximum loan-to-income (LTI) to six times income.