Just over 1 in 10 of adults intends to make a capital withdrawal in the coming months, the highest proportion in the 13 years of the JGFR/GfK UK Financial Activity Barometer*, continuing a trend of recent quarters. Such withdrawal activity may also reflect a greater financial awareness among the population to monitor their finances, especially deposit rates and move money around. Nearly 6 out of 10 of intending capital withdrawals are from outright owners, and close to a half are over 50. Many of these may be accessing pension pots allowed under the new pension freedom. A smaller minority are under 30, a number of whom may have saved up a deposit to put down on a property to buy.
Capital withdrawal intentions**, 2002-15
Many people expecting to withdraw capital intend to save / invest the proceeds especially into ISAs/ Junior ISAs. Prospects for such product providers are at a survey high. Overall demand for savings products is very strong with a record level of ISA intentions. A trend of recent quarters has been in making regular savings contributions which is set to continue in Q1. While investment sentiment fell to its lowest in 3 years, on the back of volatile and uncertain stock markets, life & pension providers can look forward to above average fund inflows, especially regular pension contribution intentions that are at a record level. Auto-enrolment into pension schemes in the workplace may be the main trigger, with intentions increasing over the past year. As Christmas and New Year sales bills come in so demand for consumer credit has fallen back with the exception of car finance plan intentions that continues to be the strongest of all 18 categories of savings, investment and borrowing products.
Housing market prospects are weaker than in Q4 with property purchase intentions notably lower.This may reflect the rise in stamp duty on investment properties and second homes. Fewer people intend to take out a mortgage or re-mortgage, although demand is well up compared to a year ago. Regionally housing market activity in prospect is strongest in London and the South East.
Housing market intended activity, 2002-15
Overall the JGFR Financial Activity Barometer** is little changed at 104.8 on Q4 and up 1 point on Q1 2015. The JGFR Savings & Investment Index is a point higher at 112.3, a record high, while the JGFR Borrowing Index dropped 3 points to 86.0, down from 94.5 a year ago. There is little change in the JGFR Debt repayment index, down 1 point at 103.1, but 6 points up on Q4 2015. Repaying debt continues to be a priority for many people with around 3 out of 10 adults intending to repay / pay down debt in the coming months.
UK Financial Activity Barometer 2002-15
Over the past 2 years more people (around 8 out of 10) have become financially engaged (undertaking 1 or more financial activity), down slightly on Q4 and Q1 2015. Among people intending undertaking 2 or more financial activities some 8 million more people are active compared to Q1 2013 reflecting strengthened household finances and confidence. With the increased demand, it also suggests more trust in product providers.
Commented John Gilbert, Chief Executive of JGFR:
“The Q1 Financial Activity Barometer continues to show the trend over the past two years to greater financial engagement among consumers. This will be welcome news to providers but with more people withdrawing money as well as having money to invest, it does highlight the demand for financial advice/guidance/information. One continuing industry success story is in the take-up of car financing plans with a very good Q1 in prospect. Car manufacturers alongside major retailers and tech giants are becoming increasingly financial services businesses”