People with student loans who are saving for a home deposit put away nearly £2,000 less per year than those without such debt, according to a new report by Barclays. The bank found that graduates with outstanding loans save an average of £310 per month towards a deposit, compared with £473.70 for those without loans — a gap of £163.70 per month, or £1,964.40 annually.
The report also revealed that 44% of student loan holders said repayments limit their ability to build long-term financial stability, while 41% said it prevents them from entering the housing market. The findings come amid renewed scrutiny of the student loan system after Chancellor Rachel Reeves froze the repayment threshold for three years from 2027 in her November budget, sparking criticism from Labour MPs and a Treasury select committee inquiry.
Meg Hillier, the Labour MP who chairs the Treasury select committee, highlighted the impact of high housing costs on young people, noting that in her constituency, two-bedroom flats cost up to £650,000. She suggested this could partly explain falling birthrates in London, contributing to smaller school rolls and even school closures.
Barclays said many first-time buyers are attempting to reduce costs by targeting homes below the stamp duty threshold. Data in the report shows that 68.5% of first-time buyer purchases in February 2026 were of properties under £300,000, up from 60.9% in February 2025. Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Student loan repayments are slowing deposit saving for many aspiring buyers, while volatile energy prices are forcing households to think much harder about the long-term running costs of their homes.”
