Rent and mortgage spending growth hits 17-month low in August
- Rent and mortgages spending grew by just 1.1 per cent in August, the lowest rate of growth recorded since March 2023
- Consumer confidence has increased following the base rate reduction, with 70 per cent confident in their household finances, up from 65 per cent in July
- The start of the new academic year squeezes rental supply, as one in six 18-34-year-olds say the influx of students is causing too much competition in the market
- Making the most of the sunshine, Brits invested more on their outdoor space in August, resulting in the highest growth for garden centre spending this year, up 8.0 per cent
- 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
The latest Barclays Property Insights report found that growth in rent and mortgage spending slowed to the lowest rate in 17 months, following the Bank of England’s base rate reduction on 1 August. In response, consumers are feeling more confident in their household finances, though some concerns around rent and mortgage affordability remain. Meanwhile, housing supply for renters continues to be an issue, with the influx of students into the market adding to the competition for younger house-hunters.
Spending on rent and mortgages grew by just 1.1 per cent in August, the lowest rate recorded since March 2023.This follows the Bank of England’s decision to drop the base rate by 0.25 per cent earlier in the month. For now, Brits are saving on costs through their bills, as warmer weather coupled with the Ofgem energy price cap resulted in the fourth consecutive month of falling utilities spending, dropping -11.4 per cent year-on-year.
Amidst the easing of some of these financial pressures and reduced inflation, the proportion of consumers confident in their household finances hit 70 per cent for the first time since April this year, up from 65 per cent in July. Confidence in the UK housing market has also risen, increasing from 25 per cent to 29 per cent in the same four-month period. However, with 78 per cent of mortgage holders reporting they have a fixed-rate deal, only a small proportion of consumers will be feeling the benefits of recent interest rate reductions. This is reflected in the marginal decrease in those not confident in their ability to afford rental or mortgage payments, which dropped from 16 per cent to 15 per cent month-on-month.
Freshers frenzy
For renters, competition for properties is an ongoing struggle as, for the fourth month in a row, 20 per cent report getting less value for their money due to high demand. Amongst the 18-34-year-old group this rises to over a quarter (26 per cent). Young renters are also facing additional pressures as students enter the market for the new academic term, with more than one in six (17 per cent) saying the influx of students is causing too much competition for properties. Given the extra squeeze on housing supply, only 14 per cent of 18-34-year-old homeowners say they are considering selling their home, with many opting to retrofit instead, as three in 10 (28 per cent) say they are making improvements to their home to make it more energy efficient.
Good weather brings greener thumbs
Spending at garden centres reached record growth for this year, up 8.0 per cent, as the long-awaited improvement in weather resulted in people choosing to spruce up their gardens in August. As more people spent time out of doors, home improvements & DIY was down -5.7 per cent, though many – particularly younger people – are intending to get started on projects once Autumn begins, with 18 per cent of 18-34-year-olds saying they are beginning home improvements ahead of the Christmas period.
Mark Arnold, Head of Mortgages and Savings at Barclays, said: “In the year to date we’ve seen encouraging signs that spending on rent and mortgages is decelerating on the whole, but unsurprisingly it isn’t a linear descent and we could see some volatility over the coming months, despite the recent interest rate cut.
“Many people think that interest rates are what really determine the mortgage market – and whilst that’s true to some extent , for me, the biggest driver is confidence. If you're going to make the biggest purchase of your life, you need to be confident that the economy is stable, inflation is under control, and you know what you're going to pay. That stability and confidence will determine how people spend, even for renters.”
Phil Spencer, TV Property Expert, said: “As we head into the Autumn, there are a number of seasonal impacts to the property market which can prove to be a sticking point for consumers trying to move. Particularly for renters living in university towns, timing is everything as over the coming weeks many students will be entering the market to find accommodation near to their classes.
“Landlords too might want to consider how and when they advertise their properties – though September might bring plenty of candidates, if you are looking for a longer-term tenant, it could be worth waiting for a few weeks until the back-to-school flurry calms down.”
For more information on the cost of mortgage repayments, go to the Barclays mortgage calculators at barclays.co.uk/mortgages/mortgage-calculator/.
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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 22nd July 2023 – 14th August 2023 vs 20th July 2024 – 12th August 2024.
Across its issuing and acquiring businesses, Barclays sees nearly 40 per cent of the nation’s credit and debit card transactions, which provides us with unique insight into UK consumer spending. This press release contains consumer card spending data from Barclays’ issuing business – i.e. Barclays debit card and Barclaycard credit card transactions. It relates to the period 22nd July 2023 – 14th August 2023 vs 20th July 2024 – 12th August 2024.
The Barclays Consumer Spend research in this press release was carried out between 16 and 20 August 2024 by Opinium Research on behalf of Barclays. There were 2,000 respondents in each round of research, 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
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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.