Despite growing stability in UK housing costs, which saw their lowest uplift in 12 months, many consumers are still cutting back or looking for additional sources of income as they continue to feel the effects of last year’s volatility, according to new data sourced from millions of Barclays current accounts.

As a result, consumer card spending on non-essential items slowed to its lowest level in 18 months.

Barclays data shows that Brits spent just 1.8% more on their mortgage and rental payments in March compared to last year. This was far below the 12.2% increase recorded in June 2023 (when growth was at its highest), and the lowest year-on-year increase on file since March 2023.

However, 16% aren’t confident in their ability to meet their mortgage or rental payments, and 18% are adjusting their spending habits to cope with rising housing costs.

To improve energy efficiency and safeguard against future energy price shocks, one in 10 homeowners are taking steps to retrofit their property. To generate additional income, a relatively small percentage of homeowners (3%) have started renting out a room in their house in the past year. However, this figure rises to 12% for homeowners in London.

Many renters say they’re losing out because demand is outpacing supply – 22% feel that there is too much competition for rental properties in their area, resulting in less value-for-money. As the current cost of living makes building sufficient savings more challenging, one in four renters (25%) also cites the cost of a deposit as the biggest barrier to home ownership.

More broadly, household spending (e.g., DIY and electronics) fell -5.2% in March, with 16% holding off home renovations due to current economic pressures.

After reaching its highest point since November 2021 in February (59%), consumers’ confidence in their ability to spend on non-essential items slipped to 55% in March. However consumers’ confidence in their household finances remained steady in March, at 67%.

Mark Arnold, head of savings & mortgages at Barclays UK, said: “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.

“However, there are reasons to be optimistic – 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.

“Moreover, homeowners are taking sensible steps to safeguard themselves from future energy price shocks – with upgrades such as installing a heat pump or solar panels to improve energy efficiency also becoming popular. We want help make those changes more affordable for customers, through schemes such as the Barclays Greener Home Reward, which gives a cash reward of up to £2,000 to UK residential mortgage customers who install a qualifying home energy efficiency improvement.”

Jack Meaning, chief UK economist at Barclays, added: “While still only tentative, the signs that the UK economy is expanding into 2024 continue to build. 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 from H2 and beyond. Today’s data shows this transition happening in real time.”