The economic uncertainty means many consumers are choosing to pay off debts, particularly mortgages, rather than save.
As a result, they are borrowing less, which could have a negative impact on the mortgage market.
A staggering 51% don’t feel more confident about the property market than they did in the early part of 2010, proving that it takes more than a royal wedding to boost consumer confidence.
Interestingly, according to Equifax’s latest consumer survey, the number of people choosing not to move house as a result of the economic uncertainty has actually dropped.
The survey shows that only 15% delayed moving house in 2010, compared to 23% in 2009.
In addition, Hometrack’s monthly survey reveals that demand for housing jumped 14.7% in February, the first increase seen for eight months.
Whilst this is good news, it’s clear that consumer confidence is still quite deflated. Most people are not planning to move any time soon and I suspect mortgage lenders are going to feel the pinch, as the market contracts over the coming months.
With consumers erring on the side of caution, the worry is that the mortgage market isn’t going to bounce back to those heady days of prosperity, as quickly as we first thought.
Another of our surveys found that 50% of Brits believe they stand to lose out financially as a result of the last Budget on 23 March. And according to a recent study from uSwitch.com, a significant 58% of people say now is not the time to make any major life changes or financial decisions.
Looking into my crystal ball, I think I can see that consumers are going to continue to review the best ways to handle and pay of their debts.
According to a survey from Gocompare.com, 29% of consumers say they are planning to reduce their loan and credit card costs this year. This means borrowing will fall, as will savings, as people focus on paying back more.
Rising interest rates could be a major cause for concern for many consumers, with 42% of homeowners saying they are worried about the effect a rise will have on their mortgage payments.
In addition, remortgaging will be less common than it was a few years ago, but with the help announced in the Budget, I expect to see an increase in first-time buyers, bringing a much needed boost to the market.
Neil Munroe is the external affairs director at Equifax
