UK Consumers Face Continued Struggles with Housing Costs: Barclays Data

Despite housing costs not being as high as last summer's peak, UK consumers are still finding it difficult to keep up with mortgage and rental payments.

Barclays bank data shows a 1.8% increase in spending on these payments in March 2023 compared to the same period in 2022, which is the lowest annual increase since March 2022.

However, this is still higher than the 12.2% jump seen in the year to June 2023.

The Bank of England (BoE) cut interest rates to record lows during the pandemic, but mortgage fees later increased significantly at the end of 2021 when the BoE began raising borrowing costs due to inflation.

Jack Meaning, Barclays' Chief UK Economist, believes the UK economy may be on the brink of a new phase, with signs of expansion continuing into 2024.

The Bank of England is predicted to lower interest rates from June, leading to reduced mortgage rates.

However, despite an average decrease in housing costs, many consumers still struggle to pay their bills, with 16% expressing uncertainty and 18% adjusting spending.

To cope financially, 3% of homeowners have rented out a room in the past year, while the figure is 12% in London.

Barclays reported that overall consumer spending in March grew by 1.9%, similar to the previous month.

Essential spending remained unchanged at 2.4%.

Spending on non-essential items experienced the smallest increase since September 2022, with a growth rate of 1.6%.