According to data from millions of Barclays current accounts, UK spending on rent and mortgage payments rose by 3.6% year-on-year, ending a three-month period of a drop in spending.
However, the report stated that the growth remains below the 12-month average of 6.5%, which could show that costs are “still heading in the right direction over the longer term”.
Only 15% of consumers said they do not feel confident in their ability to afford monthly or mortgage or rental payments, a slight improvement from 16% in March.
Regarding service charges and ground rent increases, 37% of payers said that these costs were unaffordable, with many feeling blindsided by the charges.
Around a third said they recall being made aware of the costs before buying a property, and only 23% said they understood the rate at which the costs would grow.
Only 13% said they feel they get good value for money from service charges and ground rent increases, and only 10% feel the money is spent effectively.
Around 17% of those paying service or ground rent fees are worried they won’t be able to sell their homes due to the charges.
‘Optimism is understandably tentative’
Mark Arnold, head of savings and mortgages at Barclays, said: “Consumers and lenders alike are anticipating a drop in interest rates this year, but optimism is understandably tentative as the market is still feeling the effects of last year’s volatility. Our data shows that Brits are still facing higher rent and mortgage payments, although costs are still slowing down over the longer term.
“Many homeowners have additionally been hit by high service charges in the wake of increased inflation. Prospective buyers considering a leasehold property, especially in managed flats, should ask about these costs early in the process – not just for peace of mind, but also because lenders will want to know about any financial obligations to make sure mortgage payments will be affordable alongside other outgoings.”
