Financial wellbeing in the August 2023 tracker
Summary
- Financial difficulty remains high, with 7.8% of households missing a mortgage, rent, bill, loan or credit card payment in the last month and over half of households (56%) having made an adjustment to cover essential spending
- Consumer confidence has recovered slightly compared to the previous month
- Mortgage holders and renters concern about housing costs (i.e. rent and mortgage payments) has risen to very high levels
- Worry about energy and food prices improved slightly but remains high
Financial difficulty levels remain high
Financial difficulty levels remain high this month as consumers continue to grapple with continuing pressure from rising prices, with 7.8% of households missing a housing, bill, loan or credit card payment in the past month. Though slightly lower than last month’s 8.6%, the missed payment rate remains relatively high by historical standards. It was 4.5% in August 2021 and 6.8% in August 2022. .
Of those who had missed a household bill (5% of all respondents), council tax was the most common (50%), alongside water (46%) and energy bills (42%).
7.8% of households said they had missed a payment in the last month
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. The chart shows the proportion of consumers who have missed a housing, bill, loan or credit card payment in the last month.
More than half (56%) of households reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is slightly down from the higher level seen last month (59%), but is still much higher than the 40% seen two years ago.
These insights into current household financial difficulty show that, even with recent improving inflation figures, both government and business must carefully think how they can best support those currently struggling, and those at risk of serious hardship, through the cost of living crisis.
Over half of households 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.
Consumer confidence has recovered slightly
Measures of consumer confidence improved slightly in the month to August 10th, after the dramatic fall seen last month. The fall in consumer confidence reported the previous month happened against the backdrop of a higher than expected inflation rate and further interest rate rise. In the month to August 10th, there was improved economic news with inflation dropping from 8.7% to 7.9%.
Consumers’ level of confidence in the UK economy recovered in the month to August 10th, although remains at very low levels. Less than a fifth of consumers (16%) said they think the UK economy will get better over the next 12 months, whilst 55% said they think it will get worse, giving a net confidence of -39, an eight point increase compared to last month.
Consumers’ rating of their current financial situation increased this month, up to a net score of +15 from +9 last month. Despite this improvement, this level remains much lower than levels seen in 2020 and 2021 showing that a large proportion of consumers feel pessimistic about their current household finances.
Future consumer confidence recovered slightly in the month to August 10th
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.
High levels of concern about housing costs amongst mortgage owners and renters
Four in five mortgage owners (79%) and four in five renters (81%) said that they were worried about housing costs (rent or mortgage payments). These are both the highest levels we have ever seen in the collection of this data since June 2013. There has been a steady increase in housing cost concern amongst renters over the past two years, with the proportion of those concerned being down at 62% in August 2021.
The increase in concern about housing costs has been even steeper amongst mortgage holders in the last two years, coinciding with the beginning of interest rate rises in December 2021. Prior to this we saw mortgage holder concern at around 50 to 55%. This rose rapidly in February 2022 to 67% and has now hit a new high at 79%. This shows a large swath of mortgage owners and renters are worried about rising housing costs in the backdrop of interest rate rises.
Despite this, we have not seen any rise in the rate of missed housing payments (rent or mortgage payments). The proportion of households missing or defaulting on a housing payment was at 2.2% in the last month.
Four in five mortgage owners and renters worried about housing costs
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.
These latest tracker survey results show some signs of improvements when compared to the sizable increase in financial difficulty and dramatic drop in future consumer confidence last month. Despite this, financial difficulty remains high and there is a high level of concern regarding housing costs, showing that many consumers are continuing to struggle through the cost of living crisis and are at risk of serious hardship. Both government and business must carefully think through how they can best support these people.
Methodology
The fieldwork was conducted by Yonder on behalf of Which between 9th and 10th August 2023. A sample of 2,119 consumers was surveyed online and weighted to be nationally representative.