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A nation starting to struggle

Written by Roberta Murray

Friday, 26 September 2008

Exuifax reveals gloomy findings on Britain's cost of living.

Equifax (NYSE:EFX) research of credit active consumers reveals that 78% have seen cost of living increase by up to £250 per month in last 6 months and 30% would only be able to manage their finances for 2 months if they lost their job.

Equifax surveyed nearly 600 of its customers earlier this month – at the height of the turmoil in the finance markets.

Primarily targeting credit active consumers who have requested a copy of their credit file to take more control of their own finances, the results of the survey reflect the current uncertainty in the mortgage market and suggest a distinct lack of confidence in future financial stability.

With increased rates announced today by several of the leading mortgage providers, the challenges for home owners and buyers appear to be continuing.

Key Data revealed:

33% of respondents have tried to secure a new mortgage or re-mortgage this year – with nearly a quarter (23%) finding it difficult to get a new competitively priced deal

25% think they have found it difficult to get a good deal because of past defaults on other credit; 19% think it’s because their property has lost value since it was purchased and 9% think it was either because they have applied for a number of other credit deals in the last few months or because they didn’t have a large enough deposit

A fixed rate remains the most popular option at 54%; followed by Tracker/Discount and Interest Only at 16% each

69% made only one application before securing a new deal with 19% making 2-3 applications

21% of those who have remortgaged have done so to help clear their debts

For those who currently aren’t home owners, 28% won’t be taking out a mortgage in the next 6-12 months because they wouldn’t be able to meet the repayments and 26% because they can’t afford the deposit

But recent government moves to stimulate the market appear to have had some effect on confidence in the first time buyer market with 35% saying the raised stamp duty exemption has made a difference to their plans to buy

However, 87% of all respondents think the government didn’t go far enough - with 29% thinking the exemption should have been raised to £250,000 and 30% thinking stamp duty should be abolished completely

When looking at financial stability – 78% think their cost of living has increased by as much as £250 per month in the last 6 months

If they lost their job, 30% think they could manage their finances for just 2 months before getting into severe difficulties

“Along with the news today that rates for new deals are going up again, this indicates that consumer confidence is fairly fragile – although there are some glimmers of hope in consumers’ attitudes to managing their finances”, said Neil Munroe, External Affairs Director, Equifax.