Mortgage demand sinks as consumers opt to save

Natalie Holt
23-Jul-2008
Mortgage demand has sunk to a record low as consumers choose to save instead of buying property, reveals data from John Gilbert Financial Research.
Market researchers GfK NOP, on behalf of JGFR, polled a representative sample of 2,001 consumers between May 31 and June 15 as part of the Financial Activity Survey.

It found that 27.4 million consumers expect to be financially active over the coming six months, carrying out two or more savings, investment or borrowing activities during this time.

This compares to the 25.3 million recorded in March.

But the report also found that the lack of mortgage availability has severely impacted on borrowing. The Mortgage Intentions Index, focussing on mortgage demand, fell to its lowest ever rating of 72.5, compared to 76.8 a year ago.

The findings also reveal that more consumers are planning to resort to unsecured borrowing as the number for Q2 2008 rose to 12% from 11%. Both overdraft and credit card borrowing indices moved sharply higher as well.

JGFR suggest this is down to an increasing number of consumers resorting to unsecured borrowing as personal finances come under strain.

John Gilbert, chief executive of JGFR, says the positive findings on savings and investments are refreshing.

But he adds: “It is going to be a difficult period in the housing market and the rise in expected credit card and overdraft borrowing suggests that an increasing minority of consumers are struggling financially.

"A sharp drop in the price of oil is the best summer news that consumers can hope for.”