Consumer confidence fell for the first time in June, according to the latest figures by Nationwide.
Over the course of the month, the financial provider's Consumer Confidence Index stood at 95, compared to the 99 recorded in the previous month. Consequently the decrease - which was the first fall since December 2006 - was said to halved the surge in confidence noted in May. Figures from Nationwide also revealed that the Present Situation Index, in which respondents are questioned about the condition of the current economic and employment climate, fell to 98 after witnessing three months of consecutive growth.
Chief economist Fionnuala Earley said: "The fall in confidence in June reflects some weakening sentiment about the economy and jobs, both now and in the future. Higher interest rates are likely to be a major factor behind this as consumers recognise their impact on the wider economy as well as on their own pockets."
The willingness to spend money was reported to be the only index to have risen over the month, increasing by two points. However, this figure was reported to be "broadly flat" compared to the previous six-month period, which could indicate a fall in the uptake of borrowing via personal loans and other avenues of lending.
"Spending confidence ticked up very slightly in June but overall it is significantly lower than this time last year. It now seems likely that rates will rise in July with a significant risk of a further increase in the autumn and we expect to see consumers tightening their belts in the months to come," Ms Earley added.
Statistics from Nationwide also indicated a reduction in those positive about buying products. The proportion of consumers thinking that now is a good time to purchase household goods fell from 54 per cent to 45 per cent, with those believing it is neither a good or bad period increased to 45 per cent. Levels of those stating that it is a bad time to make such purchases stayed at six per cent between May and June.
For major goods on the other hand, such as a car or house, those who thought that June was an opportune moment to make buy such items had decreased slightly from May, falling by one percentage point to 18 per cent.
Meanwhile, the effects of recent increases to the base rate were reported to be impacting upon Britons' view of property price growth. According to Nationwide, consumers now expect house costs to rise by 2.9 per cent rather than the 4.5 per cent noted in May. The economist claimed that "some slackening in the housing market" is set to take place as rising interest rates curb price growth and affect consumers' ability to make secured loan repayments.
In related news, recent figures from Hometrack have revealed that month-on-month property prices rose by some 0.3 per cent over the course of June. The third consecutive fall in growth, this figure was reported to be half of the 0.6 per cent increase noted in May. Howard Archer, chief UK and European economist for Global Insight claimed that the figures indicate a slowing in the market as borrowers struggle more to meet secured loan costs due to rising interest rates and low income growth.
Author Resource:-
Abbi Rouse writes for Essentially Home Loans. Our visitors can apply for secured home loans online, for whatever reason with whatever credit history. Visit us today for the best rate loans available.
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