Consumer confidence is experiencing a downward trend as households face the effects of soaring mortgage rates.
In July, confidence levels, which had been steadily improving since the mini-Budget, declined for the second consecutive month, according to a survey conducted by YouGov and the Centre for Economics and Business Research (Cebr).
Simultaneously, two separate surveys revealed that small businesses are particularly vulnerable to the current economic crisis, with nearly half of them stating that the slump is worse than during the pandemic.
YouGov’s survey of 6,000 respondents found that overall consumer confidence dropped by 1.6 points last month, reaching a neutral score of 100. Previously, the nation had been slightly optimistic.
The public has become more pessimistic regarding personal finances, house prices, and the outlook for businesses compared to the last YouGov survey.
This shift in sentiment correlates with the surge in mortgage rates that began in late May.
Kay Neufeld, head of forecasting at Cebr, suggests that concerns about rising mortgage rates and housing cost pressures are likely contributors to the decline in confidence levels.
According to Elizabeth Martins, UK economist at HSBC, there is a significant connection between the housing market and consumer spending.
She explains, “The housing market is under pressure, and that affects consumer confidence.”
The downturn is directly impacting small and medium-sized businesses.
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