Consumers Not Spending On Major Purchases

Consumers could be using cheap loans to consolidate their existing debts rather than to fund big purchases, based on the findings of research carried out by GfK NOP on behalf of the European commission. According to the market research company, its consumer confidence survey of 2,000 individuals aged 16 and above revealed that the climate for major purchases lessened in the month of October, based on the latest index score. GfK NOP uses a number of indices to score different areas of consumer confidence, with the major purchases measure down two points to minus five. This represents an 11-point fall from the same period last year and is the lowest the index has been for almost 12 years, suggesting less people are willing to make a major purchase through savings or an easy loan. The overall consumer confidence index fell in October to a score of minus eight, with the drop in the major purchases index contributing to this. However, GfK NOP also suggested that the run-up to Christmas could be influencing consumer confidence, a time when some may look to a cheap loan to help them cover the cost of the festive season. This month, the index score slipped down another point. The measure for major purchases is now at its lowest level since December 1995, which we suspect to be a knock on effect of Christmas just being round the corner, on top of a reluctance to spend large amounts of money at a time when higher interest rates are beginning to take effect, said Rachael Joy from the consumer confidence team at GfK NOP. Ms Joy went on to discuss people s feelings for their personal economic situation over the next year as well as respondents thoughts on the general economic situation over the next 12 months. These areas, the research showed, were positive ones for the respondents, with rises noted in both areas. This could mean that people will feel more able financially to take on a cheap loan to fund a major purchase, knowing they will have the money in place to repay the debt. People s forecast for their personal and general economic situation over the next 12 months has seen small increases, indicating a more positive outlook for the future, Ms Joy added. The forecast from people for the next 12 months for the general economy looks a lot more positive than the confidence following the last 12 months, according to the GfK NOP research. The index for general economic confidence over the last 12 months fell one point in October, to stand at an overall score of minus 30. According to comments this week from John Charcol, this improved confidence for the year ahead could be borne out with an interest rate cut. Katie Tucker from the firm said that base rate rises in the last 18 months have had the desired effect of slowing the housing market, meaning a cut in the Bank of England s interest rate could be seen in the early part of 2008. In August, research from ICM commissioned by Intelligent Finance revealed that Britons were worried about rises in the base rate of interest. Some 41 per cent said they were worried or very worried by the thought of a rate change. Steve Smith writes for 1 stop finance shop where visitors can apply for UK debt consolidation loans and also focuses on cheap personal loans and bad credit secured loans for UK residents.