Borrowing Intentions Surge
Written by JGFR
15 Apr 2009
Seemingly responding to government wishes for more borrowing and spending and less saving, consumers’ borrowing intentions surged in the 28th quarterly JGFR Financial ActivitySurvey to the highest in 2 years.
1 in 5 consumers intend to borrow in the coming 6 months compared to 14% last December and 16% a year ago.
The strongest growth is in mortgage intentions with almost double the proportion of intending mortgagors than last quarter, and at the highest level since September 2005.
A similar rise is in personal loan demand.
Drop in savings intentions
Overall the proportion of financially active consumers fell from 79% to 77% on the quarter, although it is well up on a year ago (73%).
Fewer prospective savers– down from 70% in December to 66% in the latest survey - pushed the headline measure lower. Interest rates falling close to zero will have dissuaded many people from depositing cash and taking out ISAs.
The proportion of people expecting to place a cash deposit and take out a cash ISA fell from 37% to 33% in both cases.
Higher debt repayment in prospect
At the same time, very low interest rates will induce more people to prioritise debt repayment.
In the current survey 29% of adults expect to pay down / pay off debt, the highest proportion since mid 2006.
Life and pension product demand down slightly; investment sentiment at a survey low
Demand for life and pension products was down slightly on the quarter (39% v 41% intending to contribute to a life/pension product), although intended lump sum contributions are at a record high – possibly boosted by much publicity about the benefits of SIPPs.
Investment sentiment is at a record low.
Overall JGFR headline FAB Financial Activity Index at highest level since Q3/Q4 2006
Despite the fall in intended savings activity, the 2-quarter JGFR headline index rose to 99.1 from 98.0 in December – its highest score since Q3/Q4 2006.
Commented John Gilbert, Chief Executive, JGFR:
“For the government the survey findings should provide welcome news and will increase the pressure on the banks to lend more. As a result this spring’s house buying season may be better than expected and will help to boost the economy, especially as consumer confidence
and financial well-being appear to have bottomed out”
*GfK NOP interviewed a representative sample of 2003 UK adults aged 16+ between March 6th and 15th by telephone.
In the survey:
- Respondents are asked about their savings, investment, borrowing and debt
repayment intentions across some 18 categories in the next 6 months.
- Respondents are also asked who they regard as their main financial services
March - 2009
Last Updated ( 15 Apr 2009 )