The Barclays Property Insights report found that spending on rent and mortgage payments grew 8.2% year-on-year in November.
The report attributed the increase to more homeowners rolling off fixed rate mortgages onto higher interest rates.
When a borrower comes to the end of the initial fixed rate deal on their mortgage, their lender will automatically switch them over to a standard variable rate (SVR) if an alternative deal isn’t selected by the borrower.
An SVR can be considerably higher than the rate paid on an initial deal, leading to a sharp rise in the borrower’s monthly mortgage repayments.
However, in spite of these increased costs, the report suggested consumers have maintained confidence in their ability to afford their housing payments.
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It said concerns around rising interest rates have dropped slightly to 59% in November, down from a high of 63% in June 2024.
This followed the Bank of England’s decision to cut the base rate to 4.75% earlier that month.
Rising household bills
Meanwhile, 41% reported being ‘very concerned’ about rising housing bills, with 56% also ‘somewhat worried’ about the impact of these costs.
At the same time, 41% said they are adjusting their spending habits to offset rising housing costs, with 29% saying they are looking for ways to save money on their rent or mortgage.
Energy saving
Spending on utilities was down 10.6% year-on-year in November as prices remained below 2023 levels, the report stated.
However, this is the smallest decrease since July 2024, reflecting the energy price cap rise that came into effect on 1 October and the arrival of colder weather.
Meanwhile, a quarter of homeowners are making improvements to their home to increase its energy efficiency.
Among those making changes, 52% are seeking to reduce long-term energy use and a fifth hope to improve the value of their property.
The most popular improvements are loft insulation at 48%, wall insulation at 37%, double or triple glazing at 35%, and fitting solar panels at 33%.
However, the bank added that while some consumers are already taking these steps, others are dissuaded from making improvements to their home because they don’t understand which options are right for their property.
Some homeowners may also be reluctant to shoulder the financial burden of retrofitting.
Barclays went on to say that 23% of homeowners believe stamp duty costs are the biggest barrier to buying their next home.
The tax is even more significant for younger homeowners, at 39% for those aged between 18 and 34, compared to 15% for those above 55.
Home buying aspirations
Among renters, only 7% said the recent changes to stamp duty in the Chancellor’s October Budget will delay their home buying aspirations.
However, this rises to 27% in London.
By contrast, almost two-thirds (64%) agreed that property prices are the biggest barrier to buying a home.
For tenants who are taking steps to save up for their housing deposit, trying to reduce monthly bills was the most popular option, at 37%, alongside reducing discretionary spending, also at 37%.
Three in 10 said they were cutting back on holidays to save cash, with a similar proportion investing in order to build their housing fund.
Brits rein in seasonal decorations
With Christmas fast approaching, sustainability and budgeting are front of mind, with 42% of those who celebrate Christmas choosing to reuse decorations instead of buying new.
In addition, 24% of those trying for a more sustainable Christmas are opting for LED light bulbs.
A total of 51% are choosing to forgo buying a Christmas tree or decorations this year.
The average amount spent decking the halls is £33.30, compared to £204.20 on presents, £51 on festive parties and socialising, and £41.90 on travel to see friends and family.
Tenants are more likely to opt out of spending on seasonal interiors, at 56%.
However, they also reported limitations in their ability to decorate, with 12% saying that their housing situation prevents them decorating for the festive season in the way they’d like to.
Mark Arnold, head of mortgages and savings at Barclays, said: “The rise in rent and mortgage spending dampens some of the optimism felt following the recent drop in interest rates.
“For mortgage holders coming to the end of fixed rate deals set in or before 2022, they will only now be feeling the impact of the interim rate volatility.
“These effects are then being passed through to the rental sector, through higher rents and reduction in supply.”
This article was first published on YourMoney.com‘s sister site, Mortgage Solutions. Read: Rent and mortgage spending reaches 14-month high, reveals Barclays report
