The Lloyds Bank spending power report measure of consumer sentiment lifted to 130 points in February, marking the highest reading since the survey started in November 2010 and a 21-point increase on this time last year.
Confidence in the UK's economic situation generally has seen the biggest improvement and is now nearly 100 points higher than in February 2013, Lloyds said.
Just 27% of people surveyed think the country's financial situation is "not good at all", marking the lowest percentage since the survey began.
Sentiment towards the housing market is also at the most positive level seen by the survey, with 45% of people saying the market is either "somewhat good", "very good" or "excellent".
Lloyds predicts confidence in the property market is likely to improve further in the coming months, following the Government's confirmation in the recent Budget that the Help to Buy equity loan scheme to help people with a 5% deposit to get a mortgage is being extended to the end of the decade.
Growth on essential spending, including spending on food, gas and electricity and fuel bills is also falling back as the pressure on households eases.