The Q3 JGFR/GfK UK Financial Activity Barometer (FAB) shows near record demand for consumer credit in the coming months.
Overall, the proportion of people intending to save, invest or borrow is lower, slipping from 80% of adults to 79% on the quarter, and down from 82% a year ago. The 2-quarter JGFR headline FAB Index is however little changed at 100.4, but down from 105.0 12 months ago.
Compared to intentions in the run-up to last year’s EU Referendum, more people expect both to borrow and to repay debt, but fewer people intend to save / invest. This may reflect the squeeze on household incomes and falling consumer confidence in recent months.
The JGFR Borrowing Index is up 12 points to 100.7, the JGFR Debt Repayment Index up 8 points to 117.1, while the JGFR Savings/Investment Index is down 4 points to 107 compared to Q3 2016.
Both demand for secured credit (mortgages) and unsecured credit have surged in the past year as consumer spending helped to boost UK GDP post the Brexit vote, stimulated by the August 2016 measures by the Bank of England to avoid recession. The Q2/Q3 JGFR Mortgage Index (108.2) is at its highest level since June 2003, jumping 21 points over the past year. The Q2/Q3 JGFR Consumer Credit Index is up 10 points on a year ago at a record 119.1.
Over the past year there has been a shift in type of consumer credit demand, with a fall in the JGFR Car Finance Plan Index from its record highs of 2015 but a surge in demand for credit card borrowing, overdraft borrowing and personal loans. A notable feature has been a growing minority of consumers expecting to use multiple sources of consumer credit.
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