Mortgage payments up 6.3% year-on-year: Barclays

The month-on-month difference in housing costs was marginal, indicating consumers may not be feeling worse off in the short term.

Related topics:  Mortgages
Rozi Jones | Editor, Barcadia Media Limited
11th June 2024
a man looks at a coffee table covered with receipts and a calculator
"There are encouraging signs of improvement ahead, with falling inflation and interest rate cuts in Europe giving hope that the Bank of England will follow suit in the coming months."
- Mark Arnold, head of savings and mortgages at Barclays

Spending on rent and mortgages increased 6.3% year-on-year in May – faster than April’s uplift of 3.6%, according to data sourced from Barclays current accounts.

Meanwhile, consumer confidence has taken a knock as Brits also started to feel the impact of rising household bills, such as broadband and council tax.

However, the month-on-month difference in housing costs was marginal (-0.01%), indicating consumers may not be feeling worse off in the short term, particularly in light of the decrease in the Ofgem energy price cap in April which led to consumer spending on utilities falling -12.5% in May.

In addition, Barclays says signs of optimism are emerging owing to falling inflation and energy prices, and increased spending on home improvements show indicators of recovery for the sector.

Some comfort is being taken from the latest inflation figures, with six in 10 (62%) saying the slowdown has made them more able to live within their means, and a similar proportion (56%) feel more confident in their household finances. Meanwhile, confidence in the strength of the UK housing market rose slightly last month from 25% to 27%.

First-time barriers

Getting on the property ladder is still seen as a major milestone for many Brits, with a tenth (10%) of people who have never owned a property saying they feel under societal pressure to be a homeowner. Three in 10 (30%) cite the cost of a deposit as the biggest barrier to buying a home, whilst 18% say they are delaying entering the property market due to high interest rates.

Some are choosing to forgo homeownership altogether, with one in seven renters (15%) saying they prefer the flexibility it provides them. For others, housing is no longer an enticing investment, as 12% say they prefer renting due to low confidence in the strength of the UK housing market.

Looking at the Bank of Mum and Dad, the older generation received less help from parents to buy their first home – 10% of over 55s say they received financial support, compared to 19% of 18-34-year-olds.

For those who have purchased property, motives were varied – 30% bought a home because it was cheaper than renting in the long term, whereas 24% said they got on the property ladder because it was a good investment.

Mark Arnold, head of savings and mortgages at Barclays, said: “Our latest spending figures show that rent and mortgage payments are still posing a challenge for consumers. However there are encouraging signs of improvement ahead, with falling inflation and interest rate cuts in Europe giving hope that the Bank of England will follow suit in the coming months."

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