Falling inflation and energy bills ease pressure on household finances, amid rising rent and mortgage costs

• Consumer spending on utilities fell -12.5 per cent in May following the reduction of Ofgem’s energy price cap in April
  
• Spending on home improvement and DIY showed signs of recovery last month, with the sector seeing its strongest performance since August 2023
• Rent and mortgage costs grew as spending increased 6.3 per cent in May – faster than the 3.6 per cent recorded in April
• The month-on-month difference in housing costs was marginal (-0.01 per cent), indicating consumers may not be feeling worse off in the short term
• Nearly a third of homeowners bought their first property because it was cheaper than renting in the longer term
• Barclays Property Insights combines transaction data from millions of Barclays current accounts with consumer research to provide an in-depth look at UK housing costs

Data sourced from millions of Barclays current accounts* reveals spending on rent and mortgages increased 6.3 per cent year-on-year in May – faster than April’s uplift of 3.6 per cent. However, signs of optimism are emerging owing to falling inflation and energy prices, and increased spending on home improvement shows indicators of recovery for the sector.

Barclays Property Insights data shows that the cost of rent and mortgages continued to accelerate in May, with a 6.3 per cent increase year-on-year. 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.

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

Despite increased housing costs when compared to 2023 figures, the month-on-month difference was marginal (-0.01 per cent), indicating that 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 per cent in May.

First-time barriers

Getting on the property ladder is seen as a major milestone for many Brits, with a tenth (10 per cent) of people who have never owned a property saying they feel under societal pressure to be a homeowner. Three in 10 (30 per cent) cite the cost of a deposit as the biggest barrier to buying a home, whilst 18 per cent 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 per cent) saying they prefer the flexibility it provides them. For others, housing is no longer an enticing investment, as 12 per cent 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 per cent of over 55s say they received financial support, compared to 19 per cent of 18-34-year-olds.

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

Home improvement receives bank holiday boost

While the retail sector continues to struggle, consumer spending on home improvement showed signs of recovery last month. Furniture stores, though still in decline, saw their smallest decrease (-2.3 per cent) since last August, while home improvement and DIY stores (-5.4 per cent) had their best performance since last September, likely boosted by homeowners capitalising on the early May bank holiday to spruce up their living spaces.

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.

“Many lenders are finding creative solutions to the problems faced by first-time buyers. Products like Barclays’ Springboard mortgage or Kensington Mortgages’ flexible lending criteria help to overcome some of the barriers and make homeownership more feasible.”

For more information on how Barclays is supporting first-time buyers, visit www.barclays.co.uk/mortgages/first-time-buyers/.

-ENDS-

Notes to Editors
*Mortgage and rental payments data sourced from Barclays current accounts – e.g. transactions identified as direct debits and bank transfers to mortgage lenders and private landlords. Please note: the data includes payments to multiple lenders (including Barclays). It relates to the period April 20th 2024 – 16th May 2024. It is compared to the period April 22nd 2023 – 19th May 2023.

Across its issuing and acquiring businesses, Barclays sees nearly half of the nation’s credit and debit card transactions, which provides us with unique insight into UK consumer spending. The spending data in this press release is sourced from Barclays’ issuing business – i.e. Barclays debit card and Barclaycard credit card transactions. It relates to the period April 20th 2024 – 16th May 2024. It is compared to the period April 22nd 2023 – 19th May 2023.

The Barclays Consumer Spend research in this press release was carried out between 17 May 2024 and 21 May 2024 by Opinium Research on behalf of Barclays. There were 2,000 respondents, providing a representative sample of UK consumers by age, gender, region, and income group.

For more information, please contact Annie McQuoid at annie.mcquoid@barclays.com

About Barclays
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About Barclays Market and Customer Insights
Barclays Market and Customer Insights helps businesses keep up to date with spending trends, monitors their market position and enhances their understanding of customer behaviour, based on actual customer spending. For further information, please email contact-MCI@barclays.com.