Graduates with student loans are saving almost £2,000 less per year towards a home deposit compared to those without such debt, according to a new report from Barclays. The bank found that those with outstanding student loans save an average of £310 per month for a deposit, while debt-free individuals save £473.70 – a difference of £163.70 per month, or £1,964.40 annually.
The report also revealed that 44% of student loan holders feel repayments limit their ability to build long-term financial stability, and 41% say it prevents them from entering the housing market. The findings come amid increased scrutiny of the student loan system following Chancellor Rachel Reeves’ decision to freeze the repayment threshold for three years from 2027, announced in the November budget.
The freeze sparked criticism from Labour MPs and consumer campaigner Martin Lewis, leading to a Treasury select committee inquiry and a ministerial review. Committee chair Meg Hillier highlighted high house prices as a barrier, noting that in her area, two-bedroom flats cost £650,000, which she linked to falling birthrates and school closures in London.
Barclays also noted that many first-time buyers are targeting properties below the stamp duty threshold to cut costs. Data showed that 68.5% of first-time buyer purchases in February 2026 were under £300,000, up from 60.9% a year earlier. Jatin Patel, Barclays’ head of mortgages, said rising external costs are reshaping home ownership, with student loan repayments slowing deposit savings and volatile energy prices affecting long-term home costs.
