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Consumer confidence slides as soaring mortgage rates hit finances

Consumer confidence continues to decline as soaring mortgage rates hit household finances.

Confidence, which had been improving since the aftermath of the mini-Budget, slid for the second month in a row in July, according to polling by YouGov and the Centre for Economics and Business Research (Cebr).

It came as two separate surveys found small businesses are being hit particularly hard by the economic crunch, with almost half claiming the current slump is worse than during the pandemic.

Overall consumer confidence declined by 1.6 points last month, according to YouGov’s poll of 6,000 people, falling to 100. The score means the nation is “neutral” on the economy, having previously been slightly optimistic.

The public have become more pessimistic about personal finances, house prices and the outlook for businesses since YouGov’s last survey.

The shift in sentiment over recent months has coincided with a surge in mortgage rates that began at the end of May.

Kay Neufeld, head of forecasting at Cebr, said that “concerns about rising mortgage rates and wider housing cost pressures” were likely behind wobbling confidence.

Elizabeth Martins, UK economist at HSBC, said there is a strong relationship between the housing market and spending.

She said: “The housing market is under pressure. That affects consumer confidence.”

The downturn is having a direct impact on small and medium-sized businesses.

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