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Time to save

Written by Paul Williams

Thursday, 02 October 2008

Consumers intended savings/investment and borrowing activity hits 2-year high.

John Gilbert Financial Research has today announced that consumers expected savings/investment activity is at its highest in two years.

This is the main finding from the 27th Financial Activity Survey commissioned by financial research specialist JGFR from GfK NOP.

The banking crisis has dominated news headlines over the past weeks, coupled with reports of an impending recession would suggest contrary to what appears to be a resilient show of trust and confidence in financial services and institutions.

The headline FAB Activity Index rose to 94.6 from 93.0 in June, its highest level since Q3/Q4 2006 (99.7).

Greater intended cash savings and life/pensions activity are behind the rise. The FAB Savings & Investment Activity Index climbed back above 100 (100.4) for the first time in two years and compares to 97.6 a year ago.

More people need to save for property deposits and for their pension

With people having to save more by way of deposit for property purchase and the realisation that property cannot be relied on solely for pension purposes more people expect to save in cash deposits or contribute to lump sum schemes in the coming months.

High volatility in stock and bond markets has reduced the numbers of active investors with the gap between intending buyers and sellers narrowing. Overall equity investment sentiment is at its weakest since Q2/Q3 2003.

Borrowing demand generally weak

With financial well-being at near record lows as a result of squeezed household incomes and rising job worries, borrowing intentions remain at close to survey lows.

The FAB Borrowing Index fell to 71.6 from 73.1 in June and is little changed on a year ago. Personal Loan demand fell to its lowest ever. Borrowing intentions by credit card and overdraft pushed the overall FAB Consumer Credit Index to its highest (76.9) since Q1/Q2 2007.

No sign of pick up in housing market confidence

Housing market confidence is at a new low. Fewer people expect to put down a deposit on a property to buy – the FAB Property Purchase Intentions Index falling to 69.6, down from 81.8 in June and 94.6 a year ago.

The FAB Mortgage Intentions Index (67.1) fell close to its all time low (66.7) with demand constrained by much reduced supply.

Little change in dominance of ten leading brands as Main Financial Services Providers

Despite the wind of great change buffeting the big high street banks, their share as main financial services providers (MFSPs) remains little changed on previous quarters (85%).

A rearrangement of the pecking order will take place in the coming months following takeovers / mergers. With 10% of adults willing to change to a major supermarket brand should a current account be launched the main financial services provider market may be ripe for a shake-up.

Where MFSPs have lost their way in recent years is in loosing their status as a main financial adviser. Their market share has fallen away from 28% in 2003 to 4% in 2008.

More people are turning to Financial DIY brought on by ‘24x7’ broadband internet access (59% of adults have broadband internet access) with the proportion of non-advised adults reaching some 25 million.