Rent and mortgage spending growth hits 13-month high in October
- Rent and mortgage spending grew by 6.4 per cent in October, the highest rate of growth recorded since September 2023, ahead of today’s MPC announcement on the Base Rate
- Despite the increase, consumers report feeling more confident in their ability to afford rent or mortgage payments
- Nearly half of 18-34-year-old renters are hopeful they will own a home within the next five years, but only 28 per cent of 35-54s think it will be possible in their lifetime
- Spending on utilities fell -13.0 per cent year-on-year, despite the energy price cap rise on 1 October
- Barclays Property Insights combines data and research from across the Bank to give an in-depth perspective on emerging housing trends in the UK
Growth in rent and mortgage spending increased to its highest rate in 13 months, at 6.4 per cent, last month according to the latest Barclays Property Insights report. Despite this increase, consumers displayed their highest level of confidence in the UK housing market this year, as well as in their ability to afford housing payments, with concerns over rising rent and mortgage costs reaching their lowest level since April this year.
More than half of Brits (55 per cent) are confident they can afford their monthly rental or mortgage outgoings – an increase compared to September (53 per cent). Meanwhile, concerns around rising interest rates remained steady at 60 per cent, down from a high of 63 per cent in June 2024, following the Bank of England’s decision to hold the base rate at 5 per cent in September.
When asked about their household expenses, eight in 10 Brits (79 per cent) are concerned about the rise in the energy price cap, with 42 per cent also worried about the impact of rising household bills. However, spending on utilities fell -13.0 per cent year-on-year despite the energy price cap rise on 1 October, as prices are still below where they were in 2023. Still, the price difference isn’t sufficient on its own to account for the double-digit drop in spending, suggesting that consumers are also being more frugal with their energy consumption this year.
The rental confidence conundrum
Over a quarter of renters (26 per cent) reported having confidence in the UK housing market, while a fifth (21 per cent) report that the recent drop in inflation has made them more confident in their ability to afford their housing costs. When asked ahead of the recent government Budget, young renters were hopeful about their prospects, as nearly half of 18-34-year-olds said homeownership is within their reach within the next five years. However, for older renters this drops off, as only three in 10 of 35–54-year-olds (28 per cent) think it will be possible in their lifetime.
Property prices are viewed as the biggest barrier to homeownership by seven in 10 renters (69 per cent), while 60 percent cite the cost of a deposit. Making matters more difficult, a third (32 per cent) note that their rental payments have increased over the last 12 months, impacting their ability to save for a property of their own.
Relocation, relocation, relocation
Brits have moving home on the mind as winter approaches. A fifth (18 per cent) are considering relocating in the next year, with relocating most popular among 18-34-year-olds (33 per cent). UK cities are leading the charge for a desired location (30 per cent) over the countryside (23 per cent) and coast (20 per cent).
Those living rent-free with family, friends or a partner are more likely to want to move to a city or urban area (40 per cent), likely indicative of young people saving money ahead of a move for work.
Renters are the most inclined to make a move to the countryside (28 per cent), whilst owners are more likely to want to move to a city (31 per cent). Of those considering relocation, one in seven (15 per cent) are looking to move away from the UK completely.
For those wanting to relocate, saving money is stated as the primary reason (28 per cent), followed by improving lifestyle or wellbeing (27 per cent) and being closer to friends or family (21 per cent).
Nearly a fifth (18 per cent) of those wanting to relocate said their motivation was to downsize, with this rising to 37 per cent amongst over 55s. This follows the recent Barclays Property Insights report, “Right-sizing Revolution: unlocking untapped capacity in the housing market” which recommended a number of policy changes to help make right-sizing more desirable. The report found that if properly incentivised, right-sizing could unlock an estimated 3.8 million homes in the housing supply.
Retro regret as Brits turned off by home décor dealbreakers
Although overall spend on home improvements & DIY was down compared to 2023 (-7.7 per cent), four in 10 Brits reported that they are thinking about renovating or decorating their home in the near future (44 per cent).
Over a quarter (27 per cent) are considering making improvements in order to improve the sale value of their property, as a fifth (20 per cent) admit concerns that they won’t be able to sell their property for what they believe it’s worth.
However, property updates don’t always have the desired effect for prospective buyers as six in 10 (63 per cent) Brits reported having a housing design feature that turns them off a property.
Topping the list of property turn-offs is the re-emerging trend of avocado bathroom suites (27 per cent), particularly unpopular amongst over-55s (35 per cent). This is followed by shaggy carpets (17 per cent) and textured wallpaper (17 per cent).
Mark Arnold, Head of Mortgages and Savings at Barclays, said: “The housing market can be fickle, with housing trends and macro-economic factors having a direct impact on the monthly outgoings of millions of Brits. However, what truly drives the state of play is how confident consumers are feeling. Whether contemplating a relocation, purchasing a first home or redecorating, we can see that Brits have growing faith both in the housing market and in their ability to spend.
“Whilst spending on mortgages and rent has hit its highest level this year, so has consumers’ confidence in their homes. Even if interest rates fall as predicted, if this confidence is to be rewarded, more needs to be done to unlock greater capacity in the market to help drive down some of the financial barriers facing renters and homeowners as we look ahead to 2025.”
For more information on the cost of mortgage repayments, go to the Barclays mortgage calculators at barclays.co.uk/mortgages/mortgage-calculator/.
Notes to editors
Mortgage and rental payments data is 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 23rd September 2023 – 13th October 2023 vs 21st September 2024 – 11th October 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 23rd September 2023 – 13th October 2023 vs 21st September 2024 – 11th October 2024.
The consumer research in this press release was carried out between 18th October 2024 – 22nd October 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