Financial wellbeing in August 2024
In this article
- Summary
- Financial difficulty rose dramatically in August
- Increases in missed payments are particularly seen by consumers with an income of £21,001 - £41,000, renters and mortgage holders
- The financial adjustment rate returns to June levels
- Consumers’ confidence in the future UK economy fell dramatically this month
- A lack of confidence in the future economy is particularly seen amongst pensioners
- Summary
- Methodology
Summary
- The proportion of households missing a household payment surged in the month to August 9th, reaching the second-highest level ever. This increase has predominantly been felt by consumers with incomes between £21,001 and £41,000, renters and mortgage holders.
- The financial adjustment rate (51%) increased from last month, returning to the level seen in June 2024.
- Consumer outlook deteriorated this month across all metrics. Most prominently, confidence in the UK economy has fallen to net -25.
Financial difficulty rose dramatically in August
In the last month, the proportion of households missing a housing, bill, loan or credit payment increased by 3.5 percentage points to 9.3%. This is the second highest missed payment rate we have ever recorded (since April 2020). Increases in missed payments were seen across all types of payments, with the proportion of households unable to meet the following commitments:
- A household bill was 5.7% (an increase of 1.9 percentage points)
- A rent payment was 5.3% ( an increase of 1.5 percentage points)
- A loan and credit card payment was 4.4% (an increase of 2.1 percentage points)
- A mortgage payment was 3.7% (an increase of 2.4 percentage)
The missed mortgage payment rate of 3.7% is the highest level we have ever recorded (since April 2020). With high interest rates over the last few years, many households would have been caught remortgaging onto a much higher rate, meaning they would be paying £100s more a month on their mortgage. This increase in missed mortgage payments may reflect how the problem has built up over time over many months. However, it does not explain why there was a sudden jump for this month.
9.3% of households said they had missed a payment in the month to August 9th
Approximately 2,000 respondents per wave. UK level data are weighted to represent the adult population of the UK by age, gender, region, social grade, working status and housing tenure.
Increases in missed payments are particularly seen by consumers with an income of £21,001 - £41,000, renters and mortgage holders
Some of the largest increases in missed payments came from consumers with household incomes between £21,001 to £41,000. This group’s missed payment rate rose by 5.2 percentage points from 5.3% to 10.5%, a historic high for this group. It indicates that people in this income bracket are struggling more this month than in previous months to pay essential bills.
In contrast, consumers with an income higher than £41,000 had a 2 percentage point increase to 6.3%, and the missed payment payment rate for consumers with incomes up to £21,000 decreased by 0.9 percentage points to 10.5%.
One in 10 households with an income between £21,001 and £41,000 missed a payment in the month to August 9th
Data for demographic groups are unweighted and samples vary between waves. Typical sample sizes per wave range from 637-785 for up to £21k, 760-869 for £21-£41k and 315-458 for above £41k (based on middle quartiles).
Aside from income, when looking at different housing types, the increase in missed payments was most prominently felt by renters and mortgage holders. One in six (16.4%) renters had missed a payment (a 4.6 percentage point increase from last month) and 8.3% of mortgage holders missed a payment (a 3.4 percentage point increase). In contrast, owner outright households only saw a small increase from 1.7% to 2.2%.
16.4% of renting households have missed a payment in the month to August 9th.
Data for demographic groups are unweighted and samples vary between waves. Typical sample sizes per wave range from 696-761 for outright homeowners, 532-610 for mortgage holders and 708-786 for renters (based on middle quartiles).
The financial adjustment rate returns to June levels
Half of consumers (51%) made at least one adjustment to cover essential spendings in the month to August 9th. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This represents a return to the level two months ago (51%), suggesting the dip to 42% in July 2024 was an anomaly. Much like previous months, the adjustments consumers are most likely to do are cutting back on essentials (27%) and dipping into savings (27%).
Half of consumers (51%) made at least one adjustment to cover essential spending in the last month.
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.. Adjustments include: cutting back, dipping into savings, borrowing from friends and family, taking out credit cards or loans, selling items, using an overdraft.
Consumers’ confidence in the future UK economy fell dramatically this month
Consumers’ confidence in the future UK economy has experienced a dramatic fall to -25 this month. This score of -25 represents one in five (21%) consumers believing the UK economy would get better over the next 12 months and almost half of consumers (45%) believing it will get worse. This depreciation breaks a pattern of continuous improvements in confidence in the future UK economy over the last five months, and represents the lowest level of confidence since March this year. It is not clear what drove the large fall this month, however the civil unrest throughout the country preceded the week before the survey.
Consumers are also feeling less confident about their current and future household financial situation. Compared to last month, consumer confidence in their current financial situation fell 9 percentage points to +20. Additionally, confidence in their future financial situation fell 6 points to -6.
Consumers’ confidence in the future UK economy has reduced to -25 this month
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.
A lack of confidence in the future economy is particularly seen amongst pensioners
In the last month, pensioners’ confidence in the future UK economy reduced by 30 points to -38, the lowest level of confidence for this group since July 2023. This is a much larger decrease than working age non-parents (25 points fall) and working age parents (23 point fall). It should also be noted that only three months ago, back in May, pensioners were much more optimistic about the future UK economy (+4) than working age non-parents (-20) and working age parents (-21). This dramatic change shows that many pensioners are feeling more pessimistic.
Pensioners’ confidence in the future UK economy reduced to a score of -38
Data for demographic groups are unweighted and samples vary between waves. Typical sample sizes per wave range from 528-578 for working age parents, 982-1,052 for working age non-parents and 473-539 for pensioners (based on middle quartiles).
Summary
This Consumer Insight article has shown that many households are facing financial difficulty, with one in 10 households missing a payment in the last month (9.3%) and over half of consumers having to make at least one adjustment (51%). Additionally, there has been a deterioration in consumer outlook, specifically when it comes to the future UK economy.
Methodology
The fieldwork was conducted by Yonder on behalf of Which between 9th and 11th August 2024. A sample of 2,084 UK adults were surveyed online and weighted to be nationally representative.