Consumer confidence soaring as those in debt ‘feel upbeat’ about repaying loans

Picture: PA
Picture: PA
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CONSUMER confidence is continuing with more people on top of their debt repayments and signs of life returning to the savings market, new figures suggest.

Lloyds Banks said its latest lending report showed people “feel upbeat” when it comes to the future of their finances, with 84 per cent of people now able to keep up with their debt repayments, up three per cent from the first three months of the year.

The report comes as Moneyfacts.co.uk said that for the first time since a government scheme was introduced three years ago, the rates on offer on one-year bonds are back on an upward trend - offering fresh hope for savers. The scheme gave banks access to cheap funding on condition that they passed the benefits on to borrowers, but experts say this also meant lenders were less reliant on having to attract savers’ money by offering decent rates.

In June, the top-paying fixed rate bond on the market had a rate of 1.9 per cent, but by July this had edged up to 2.05 per cent, according to Moneyfacts.

Charlotte Nelson, a finance expert at Moneyfacts, said: “July finally seems to have seen the end of the rate-cutting trend, with more providers increasing rates on their one-year fixed rate bonds than decreasing them. This is due to fierce competition between challenger banks, which are trying to dominate this sector.”

With Bank of England governor Mark Carney recently suggesting the base rate could start to increase from its historic 0.5 per cent low around the turn of the year, even better savings rates could be on the horizon.

Lloyds said the boost is financial confidence was also shown in the numbers considering taking a personal loan - which had risen by over 50 per cent in past three months. Confidence levels in paying off unsecured debt remain high, with four in five of the 4,000 people surveyed feeling confident they will meet repayments.

The top reasons given for taking out personal loans were to consolidate existing loans in one place or to purchase a car or bike.

Sam Clark, head of loans at LloydsBank, said: “We are starting to see encouraging signs as more people can better manage their loan repayments.

“Overall, the results paint a positive picture and the upward move in consumer confidence will help a lot more people feel more in control of their finances.”

But the confidence was not shared by Leeds-based debt charity StepChange. Last year, ten per cent of those going to it for help were from Yorkshire - 58,000.

StepChange’s director of external affairs, Francis McGee said that while its own research reflected the view consumer credit debt was falling - what worried him was “the rest of the picture”.

“We saw 578,000 people last year who came to us for help, and we’re on course for similar numbers this year,” he said.

“The income of people coming to us is flat at best, and there are people borrowing simply to make ends meet.

“It is a mixed picture, but there is no sign that problem debt in the UK is easing, even as the economy recovers.”