Data analysed from millions of Barclays current accounts has revealed that spending on rent and mortgages increased 6.3% year-on-year in May, quicker than April’s uplift of 3.6%.

However, Barclays said that signs of optimism are emerging owing to falling inflation and energy prices, and increased spending on home improvement shows indicators of recovery for the sector.

Barclays Property Insights data shows that the cost of rent and mortgages continued to accelerate in May, with a 6.3% increase year-on-year. Meanwhile, consumer confidence is down due to the impact of rising household bills, such as broadband and council tax.

62% say the slowdown in the rate of 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 rose slightly last month from 25% to 27%.

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

Getting on the property ladder is seen as a major milestone for many Brits, with a tenth (10%) of people who have never owned a property saying they feel under societal pressure to be a homeowner. Three in 10 (30%) cite the cost of a deposit as the biggest barrier to buying a home, whilst 18% say they are delaying entering the property market due to high interest rates.

Some are choosing to forgo homeownership altogether, with one in seven renters (15%) saying they prefer the flexibility it provides them. For others, housing is no longer an enticing investment, as 12% say they prefer renting due to low confidence in the strength of the UK housing market.

Looking at the ”bank of mum and dad”, the older generation received less help from parents to buy their first home – 10% of over 55s say they received financial support, compared to 19% of 18-34-year-olds.

For those who have purchased property, motives were varied – 30% bought a home because it was cheaper than renting in the long term, whereas 24% said they got on the property ladder because it was a good investment.

While the retail sector continues to struggle, consumer spending on home improvement showed signs of recovery last month. Furniture stores, though still in decline, saw their smallest decrease (-2.3%) since last August, while home improvement and DIY stores (-5.4%) had their best performance since last September, likely boosted by homeowners capitalising on the early May bank holiday to spruce up their living spaces.

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. 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.”