Consumers in Yorkshire are increasingly more confident about their ability to repay debts, according to a new study.
A report on the consumer credit industry by PwC reveals that only 16 per cent of respondents are worried about making future repayments compared to nearly one in three people in the last survey in August.
And as the Yorkshire economy continues to show steady growth, so is consumer confidence.
Nearly 45 per cent of consumers in the county are intending to save more in the next 12 months – up from 35 per cent last year.
Nearly four in ten of the region’s consumers pay off their credit cards in full every month. Dependence on credit to pay for essentials such as food and household bills is also at one of its lowest level with only eight per cent of Yorkshire consumers needing to do so in the last six months– down from 11 per cent in 2013.
But Gary Shaw, PwC’s financial services leader in Yorkshire, has warned: “While most people in the region are currently in control of their borrowing, and seem confident in their ability to remain so, there are a few areas of potential concern that need to take much more care.
“For example, amongst Britain’s squeezed 35-44 year old generation, 20 per cent are now borrowing simply to pay for essential items and make ends meet every month. We’re also seeing changes in the way people borrow. As well as a revival in old favourites such as credit cards, newer forms of borrowing such as peer-to-peer lending are also starting to gain ground, particularly among younger borrowers.
“Despite our survey revealing a relatively high degree of confidence among consumers about their ability to stay on top of their debts, affordability of the UK’s household debt pile may come under pressure in the coming years as just a 2 per cent increase in borrowing costs could result in households paying an extra £1,000 a year just to service additional interest costs.”
Iwan Griffiths, PwC’s financial services leader in the North, added: “With unsecured borrowing showing strong growth, bad debt levels receding to pre-crisis lows and funding costs remaining relatively low, credit card issuers are seeing strong margins and profits.
“However, there is a risk that this combination of increasing household debt to income ratio and future interest rate rises could leave consumers feeling squeezed again, potentially undermining growth for lenders and feeding through to resurgence in bad debt.
“Over the next few years, the credit card industry will also face other challenges from regulatory scrutiny of their business model to the reduced appeal to younger borrowers.”
CONSUMER CONFIDENCE IS RISING
45 per cent of Yorkshire consumers are intending to save more in the next 12 months.
41 per cent pay off their credit cards in full every month, ahead of households in Wales (31 per cent) and the East Midlands (35 per cent).
Fewer people in Yorkshire (nine per cent) are concerned about losing their jobs in the next 12 months, down from 17 per cent in August 2013.
16 per cent of the region’s consumers are worried about making future repayments on their debts.