Consumer spending on rent and mortgages increased by 4.6% year-on-year in May, down from 5.2% in April, according to the latest Barclays Property Insights report.
The slowdown marks the third consecutive month of easing growth, as many homeowners prepare to exit five-year fixed-rate deals and face significantly higher repayments.
Nearly three in 10 mortgage holders report they will remortgage in 2025, with more than 70% of those expecting costs to rise.
On average, they anticipate an increase of £331 per month, or £3,972 annually. The recent rate cut by the Bank of England is prompting some to consider longer-term fixed rates, while a quarter are weighing up standard variable rates and 7% are looking into tracker deals.
In the rental market, spending on utilities rose 4.4% in May, reversing over a year of decline and likely reflecting the April energy price cap adjustment.
Tenant demand continues to outpace falling landlord supply, pushing rents upward in the near term. A net 43% of those surveyed expect rents to rise further.
The report also highlights that 22% of renters are saving for a mortgage deposit, setting aside an average of £254.90 each month.
Across all demographics, renters expect it will take 4.5 years to save enough, with younger savers in Gen Z estimating 3.9 years, and millennials saving more each month but expecting a slightly longer timeframe.
Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Homeowners nearing the end of a five-year fixed-rate mortgage are preparing for an increase in their monthly repayments as they transition to higher rates, prompting many to weigh up the certainty of a longer-term fix against the flexibility of a variable or tracker product.
“However, the current interest rate environment has not dampened renters’ appetite for getting on the property ladder, many of whom are taking steps to save enough for a housing deposit. For those ready to buy, our data shows that we’re currently in a buyers’ market when it comes to negotiations, with most sellers willing to accept offers under asking in order to facilitate their next move.”
Will Hobbs, managing director at Barclays Private Bank and Wealth Management, added: “We remain a little more upbeat on the UK’s economic outlook than many.
“That more optimistic tilt rests on the aggregate balance sheet strength of the UK’s households as well as still brisk real wage growth for those in work.
“Unemployment is low and this latest hump in inflation is unevenly fading, which should allow interest rates to continue to trickle lower in the quarters ahead.”
