EuroWire, LONDON: Student debt is widening the gap between Britain’s aspiring first-time homebuyers, with borrowers saving nearly £2,000 less a year for a deposit than people without student loans, according to new Barclays research released on March 23. The bank said prospective buyers with student debt put aside an average of £310 a month, compared with £473.70 among those without such debt, leaving an annual shortfall of £1,964.40.
Barclays said the findings were based on two Opinium surveys of 2,000 consumers and showed that student loan repayments remain a significant financial pressure for would-be buyers already contending with elevated housing costs. Among respondents with student debt, 44% said repayments had affected their long-term financial stability, while 41% said the debt had made it harder for them to get onto the property ladder.
The figures add to evidence that housing affordability remains a central barrier for younger buyers even as demand persists in lower-priced parts of the market. Barclays said 68.5% of first-time buyer purchases in February 2026 were for homes costing less than £300,000, up from 60.9% in the same month a year earlier, indicating that more buyers are concentrating their searches below that level.
Graduate Repayments Under Scrutiny
The homebuying data comes as student finance is drawing closer political and policy attention in Britain. The Treasury Committee in Parliament said this month it had opened an inquiry into student loans and the wider taxation of graduates, after concern grew over repayment terms and the government’s decision to freeze the repayment threshold for three years from April 2027.
Current official guidance says the repayment threshold for Plan 2 student loans will be £29,385 from April 2026, while the postgraduate Plan 3 threshold remains £21,000. Borrowers on Plan 2 repay 9% of earnings above the threshold, a structure that can reduce disposable income during years when many graduates are also trying to build savings for a home deposit or qualify for a mortgage.
Debt Burden Meets Housing Costs
Official data show the scale of the debt burden facing recent graduates. The House of Commons Library said the average debt among borrowers in England who completed their studies in 2024 was £53,000 when they became liable to repay from April 2025, while outstanding student loan balances in England had reached £267 billion by the end of March 2025. Those figures underscore the size of obligations many graduates carry into their working lives.
At the same time, graduates continue to earn more on average than non-graduates, but Barclays said the survey results suggest that income advantages do not fully offset the effect of repayments and housing costs on home deposit saving. Department for Education statistics show median nominal salaries in 2024 were £42,000 for graduates and £30,500 for non-graduates. Barclays said the survey points to a housing market in which student debt is becoming a more visible dividing line among first-time buyers in Britain’s lower-priced home segments.