Surge in Borrowing Intentions in Q2

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Retail Banking

John Gilbert

John Gilbert

Chief Executive

JGFR Ltd


Despite ongoing political and economic uncertainty the JGFR/GfK Q2 UK Financial Activity Barometer* finds consumers intending increasing their financial activities in the coming months.

Around 80% of people intend to save, invest, borrow or repay debt in the next 6 months, up from 78% in Q1 and above the 15-year average of 77%, although down on 84% in Q2 2016. The JGFR quarterly FAB Index gained 2 points to 102 (107, Q2 2016), although on a 2-quarter moving average basis the headline JGFR FAB Index fell on the quarter from 102.4 to 100.0 and from 105.0 a year ago.

All 3 sub-indices - Savings / Investment, Borrowing and Debt Repayment - improved on the quarter.

Very strong borrowing intentions, at their highest since June 2007, pushed the JGFR Borrowing Intentions Index up 6 points to 98.3 and to well above the long term average of 81.3. 23% of adults intend to borrow, up from 22% in Q1 and 21% in Q2 2016 and the highest proportion since Q1/Q2 2006.

While borrowing intentions surged in Q2, debt repayment remains a priority. A third of adults intend paying down or repaying debt in Q2, a little lower than in Q1, but up on a year ago. The JGFR Debt Repayment Index edged 1 point higher to 116.6, moving towards the 14-year record of 117.6.

Consumers appear to be managing their debt better although recent data from the GfK Consumer Confidence Barometer suggests a consistent higher proportion of people running into debt (6-7%) than historically has been the norm (4-5%).

Net debt repayment (the proportion of adults intending repaying debt less people intending borrowing) decreased in Q2 to 10.1%, the narrowest since Q4 2015, but above the long-term average of 9.4%

Demand for consumer credit at 15-year record
Over the past 2 years demand for all forms of consumer credit has grown strongly on the back of record employment and often attractive financing deals on car and household goods. The headline JGFR Consumer Credit Index in Q2 reached a record 119.1, up from 113.9 in Q1 and well above the 15-year average of 87.6. A record 18% of consumers are set to use one or more form of consumer credit.

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