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What consumers really think about the cost of living crisis

Credit: Alamy

Building Societies Association

4 min read Partner content

With inflation at a 40-year high, rising interest rate rises have not stopped the cost of living crisis. This has left many people with no choice but to sacrifice not only discretionary spending, but to also cut back on essentials.

Research[1] from the Building Societies Association (BSA) reveals that 54% of Britons are reducing their energy use and 51% of those questioned are cutting back on non-essentials like eating out and going to the cinema. 41% are shopping around to find better prices and 31% plan to cut back on essentials such as food and clothing. It was expected that people would cut back on their spending during the current cost of living crisis, but the extent to which people are being forced to cut back on essentials, such as heating and food, is particularly concerning.

Consumer concerns

Despite the Chancellor’s support measures, the major concerns are still around the rising cost of energy and food.  Higher energy costs are the biggest worry for the vast majority (73%), while 66% are worried about food costs. 21% say they are concerned about rising interest rates and 32% are worried about being able to save for their future.

The research shows 24% of renters saying that they are not confident about paying their housing costs, 50% higher than just three months ago. This compares to 6% of homeowners who say they are worried about paying their mortgage. The BSA has just republished What to do if you can’t pay your mortgagewhich covers the six steps you must take to ensure you don’t lose your home, what to expect when you contact a lender; the role of debt advisers; and a section on where to turn for further help and guidance.  

Whilst it’s encouraging that many homeowners are not concerned about keeping up with their mortgage payments, this is likely to be because it will take time for the Bank Rate rises to be felt by most borrowers, as around 80% are on fixed rates. Borrowers will need to start planning for when their mortgage deal ends, although the impact is likely to be quite modest.

Of greater concern are the growing number of people who are worried about paying their rent, which has doubled in the last 15 months. Whilst the support packages provided by the Government to date are obviously welcome interventions, it’s clear that for many, more support is needed if families are to survive the current crisis without increasing levels of personal debt.

Consumer behaviour changes

It isn’t a surprise that many people are planning to make lifestyle and financial changes to cope with the cost-of-living crisis. The research shows that 20% are putting off bigger purchases like cars, household items and holidays, with 21% planning to use their savings to deal with rising costs.

Only 12% of people aren’t expecting to have to make any changes. This rises to 21% in households with incomes of £100k or more. It’s clear that spiralling inflation is impacting almost every household.

Housing market

The BSA Property Tracker[2]  also revealed that consumers’ confidence in the housing market has declined. The number of people who think that now is a good time to buy a home has slumped to its lowest level (16%) since the BSA started tracking market confidence in 2008.

39% disagree that now is a good time to buy a property, an increase from 33% in March. The main reasons these people  gave were the current high level of house prices (73%), as well as the impact of rising interest rates (70%) and high inflation (70%).

In terms of barriers to home ownership, high house prices mean that raising a deposit required to buy a property remains the biggest, with 62% of respondents citing it. However, being able to afford  the monthly mortgage repayment is rising and is now the second most common barrier (53%).

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