Barclays issues boost to bank account holders and says 'in short term'

Falling inflation and energy bills are easing pressure on household finances, amid rising rent and mortgage costs. Barclays has found. The high street bank found consumer spending on utilities fell 12.5 per cent in May following the reduction of Ofgem’s energy price cap in April.

Rent and mortgage costs grew as spending increased 6.3 per cent in May – faster than the 3.6 per cent recorded in April. The month-on-month difference in housing costs was marginal, showing account holders "may not be feeling worse off in the short term", the bank said.

The 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. Mark Arnold, Head of Savings and Mortgages at Barclays, said: “Our latest spending figures show that rent and mortgage payments are still posing a challenge for consumers.

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"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." Nearly a third of homeowners bought their first property because it was cheaper than renting in the longer term, the bank found.

Mr Arnold went on: “Many lenders are finding creative solutions to the problems faced by first-time buyers." Three in 10 (30 per cent) cite the cost of a deposit as the biggest barrier to buying a home, whilst 18 per cent say they are delaying entering the property market due to high interest rates.

Mr Arnold added: "Products like Barclays’ Springboard mortgage or Kensington Mortgages’ flexible lending criteria help to overcome some of the barriers and make homeownership more feasible.” Six in 10 (62 per cent) saying the slowdown has made them more able to live within their means, and a similar proportion (56 per cent) feel more confident in their household finances.

Meanwhile, confidence in the strength of the UK housing market rose slightly last month from 25 per cent to 27 per cent.