If you’re losing sleep over your mortgage repayment or rent, you’re not alone.
One in four Londoners (24 per cent) aren’t confident in their ability to meet mortgage and rental payments, reports Barclays. Across the UK, one in six people share the same fears.
Homeowners and tenants are cutting back to try and make ends meet, with 22 per cent making cost-saving decisions to keep up with rising housing costs.
In an attempt to boost their income, 12 per cent of Londoners have started renting out a room in their house in the past year.
“Last year’s spike in housing costs... caused both homeowners and renters to cut back while looking for additional sources of income.”
One in five London homeowners are holding off on home renovations due to the current economic crisis, although one in ten are taking the plunge and retrofitting their homes in an attempt to reduce their energy bills.
“Non-essential spending is still reeling from last year’s spike in housing costs, which caused both homeowners and renters to cut back while looking for additional sources of income — such as delaying renovations and renting out spare rooms,” said Mark Arnold, Head of Savings and Mortgages at Barclays UK.
Private rental costs in London spiked by 6.9 per cent in 2023, the highest annual jump since records began, and mortgage rates ratcheted up after 14 consecutive hikes of the base rate made by the Bank of England in an attempt to curb inflation.
Across the UK, Barclays found that people spent 1.8 per cent more on rent and mortgages in March 2024 than they did that time last year.
While still an uplift in costs, it is at least lower than the 12.2 per cent year-on-year increase households had to pay in June of 2023, when spending on housing peaked.
“There are reasons to be optimistic,” added Arnold.
“Our data shows that housing costs are stabilising, the inflationary tide is easing, and interest rates are predicted to fall over the coming months, all of which should translate into increased consumer confidence and spending.”
One in four renters cited saving for a deposit as the biggest barrier to home ownership, and 22 per cent reported that competition for rentals in their area had resulted in less-value-for-money when it came to their tenancy agreements.
“Housing costs that have been a drag on consumers for over a year are on the cusp of a turn, and will become a boost to spending.”
Consumer spending was also down as people redirected more of their income towards their housing and tried to scrimp and save elsewhere. Almost a quarter of British people would consider or are already participating in a “no spend” challenge where they pledge not to buy anything that isn’t absolutely essential.
However, if mortgage and rental costs continue to come down, Barclays forecast that people will start to spend money elsewhere again.
Jack Meaning, Chief UK Economist at Barclays, said: “With an expectation that the Bank of England will cut interest rates from June, and banks responding by reducing mortgage rates, our research suggests that the housing costs that have been a drag on consumers for over a year are on the cusp of a turn, and will become a boost to spending.”
This is the first of a monthly rent and mortgage payments report from the bank, to compliment Barclays consumer spending trends reports.
Barclays sourced data on mortgage and rental payments from transactions identified as direct debits or bank transfers from current accounts to mortgage providers and private landlords. They also surveyed 2,000 UK consumers.
