Spending on rent and mortgages increased 6.3% year-on-year in May, faster than April’s uplift of 3.6%, data from Barclays reveals.

However, data found 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.

Discussing the latest inflation figures, six in 10 (62%) said the slowdown 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 went up slightly last month from 25% to 27%.

Despite increased housing costs when compared to 2023 figures, the month-on-month difference was marginal at -0.01%.

Barclays suggests this indicates 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.

Elsewhere, one in 10 of those trying to get on the property ladder say 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, while 18% say they are delaying entering the property market due to high interest rates.

However, there are many that are choosing to forgo homeownership 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 with 10% of over 55s saying they received financial support, compared to 19% of 18 to 34-year-olds.

For those who have purchased property, 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, Barclays data reveals that consumer spending on home improvement showed signs of recovery last month.

Furniture stores, though still in decline, saw their smallest decrease (-2.%) since last August, while home improvement and DIY stores (-5.4%) had their best performance since last September.

Barclays suggests this was likely boosted by homeowners capitalising on the early May bank holiday to spruce up their living spaces.

Barclays head of saving and mortgages Mark Arnold comments: “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.”