Consumer spending on rent and mortgages increased 6.3% year-on-year in May, up from 3.6% in April, according to new analysis by Barclays.

The bank also suggested there are “signs of optimism” emerging, owing to falling inflation and energy prices, while increased spending on home improvement also indicates a recovery for the sector.

Barclays Property Insights data, based on 2,000 respondents, indicated that 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, six in 10 respondents (62%) said the slowdown in inflation 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 grew slightly last month, from 25% to 27%.

Despite increased housing costs when compared to 2023 figures, Barclays found the month-on-month difference was marginal (-0.01%), indicating that consumers may not be feeling worse off in the short-term, particularly considering the decrease in the Ofgem energy price cap in April which led to consumer spending on utilities falling -12.5% in May.

Head of savings and mortgages at Barclays, Mark Arnold, added: “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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