Barclays says typical rent and mortgage spending increased 5.4 per cent year-on-year in March, down from 7.7 per cent in February, following a fall in the Bank of England base rate. 

However, it claims household budgets continue to be stretched by rising bills, contributing to a dip in confidence in both household finances and among renters looking to purchase their first home.

Mortgage completions increased 50 per cent last month, the highest volume recorded since September 2021, as buyers rushed to lock in tax savings ahead of changes to the stamp duty thresholds. This was even higher among first-time buyers, where completions jumped 70 per cent compared to February.

With the new tax bands now in effect, a quarter (25 per cent) of existing homeowners see stamp duty as the biggest barrier to buying their next home, rising to four in 10 (39 per cent) among Gen Z.

Despite the rush of completions, many prospective first-time buyers have been delayed by the changes, with 14 per cent reporting that the recent band adjustments have impacted their ability to buy a home.

Nearly four in 10 renters (38 per cent) cite the cost of a housing deposit as one of the biggest barriers to homeownership.

However, on top of deposits, additional outlays including stamp duty, solicitor’s fees, and surveys also impact total costs. Homeowners who have bought in the last year report needing an additional £13,530 on average to cover expenses associated with buying a home. This is a marked increase from the £9,337 cited among those who purchased more than five years ago.

Not all prospective buyers are aware of these associated charges. Valuations and mortgage broker fees are most likely to come as a surprise, with one in 10 (12 per cent) unaware at the start of the process of the costs these incurred.

Even those who were aware of these fees found it difficult to forecast exactly how much they needed to set aside. A third of homeowners (34 per cent) were aware of the need to pay stamp duty but unaware of the likely cost. A further four in 10 did not know how much to save for moving (41 per cent), surveys, or legal fees (both 40 per cent).

Housing costs, including rent or mortgage payments, council tax, energy and other bills, now make up 28 per cent of income across the UK, rising to over a third (36 per cent) amongst renters. Nearly three quarters (73 per cent) say these expenses have risen in the last 12 months, averaging an extra £126 a month, or £1,516 a year. This is steepest for millennials (age 28-43), two thirds (67 per cent) feeling the impact of hikes, at £191 a month, or £2,286 a year.

Utility bills have accounted for the largest increase for nearly half (47 per cent) of consumers, followed by council tax (30 per cent). Encouragingly, Barclays data shows that utilities spending decreased -4.2 per cent in March amidst the arrival of warmer weather.

As a result of rising costs and stamp duty changes, confidence in household finances dropped to 70 per cent in March from 75 per cent in February. Confidence in the UK housing market also fell slightly to 28 per cent from 30 per cent. To combat price increases, two fifths (40 per cent) are adjusting their spending to afford their monthly housing costs.

The combination of high fees and household bills likely explain the dip in renters’ aspiration towards homeownership. Just one in six (16 per cent) currently believe that buying a property is in reach within the next five years, down from 23 per cent month-on-month.

Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, says: “We experienced a blockbuster month for completions in March, as buyers raced to get ahead of the stamp duty deadline. Meanwhile, for existing homeowners and renters the shift in sentiment reflects the cautiousness felt across the economy as a whole, as consumers are concerned about rising bills and the prospect of global tariffs impacting their wallets.

“Housing consumes a significant portion of income, particularly for renters. With four in 10 adjusting their spending to meet their housing costs, it’s clear that the financial pressures of maintaining a home are intensifying at a time where people face a delicate balance between their essential spending and long-term financial goals.”

Will Hobbs, Managing Director at Barclays Private Bank and Wealth Management, adds:“The UK economy’s cyclical pulse has been strengthening a little in the last few months. Household incomes have been growing faster than inflation for some time and that had been showing up in retail sales and even a perkier GDP report.

“The uncertainty created by the US tariffs will certainly have some dampening effect. However, there are potential offsets in the form of lower energy prices and the dramatic changes happening in Europe. The latest read on inflation suggests a little more flexibility for the Bank of England too.”