The coming months should be bumper ones for all connected with retail financial services. The Q3 JGFR/GfK Financial Activity Barometer shows demand across savings, investment and borrowing products at its highest since the spring of 2006.
Overall just over 8 out of 10 adults intend to save, invest, borrow or repay debt, up from around 7out of 10 a year ago. The remarkable transformation of household finances in the past year has increased the public's confidence and optimism and boosted financial activity.
The number of adults intending to undertake 2 or more savings, investment or borrowing products has soared, rising 9 million to 33 million, up from 24 million in June 2013. The estimated number of adults 'most financially active' (intending to undertake 6 products) increased from 3.5 million to 7.5 million. A large minority (42%) of the most financially active earn over £50,000.
More people than in any other quarter in the 12 years of the survey intend to save or invest (74%); this compares with 58% a year ago. Several product categories are at or close to survey highs – ISAs, regular savings and Junior ISAs / Child Trust Funds.
The retail investment sector should see healthy trading volumes. Investment sentiment is much improved this summer with the highest proportion of prospective equity investors since Q4 2006. Equities rather than bonds are in favour, a reversal of investor preference a year ago.
Increasing auto-enrolment of the workforce into a pension scheme appears to be increasing coverage. Among workers far more (56%) intend making regular pension payments, up from 30% a year ago. The take-up is much greater in full time work (61% v 30% a year ago)
More people (24% of adults compared with 18% in Q3 2013) are intending making regular life insurance payments, which may reflect increased mortgage intentions and the need to protect family finances.
Overall demand for life and pension products is at its highest since Q1 2006, good news for all in the financial advice industry, although with a notable advice gap, servicing such demand will be a test for the industry in the face of strict regulatory control.
After many years cutting back on borrowing, this summer sees intended credit usage back to prerecession levels. Demand for both mortgages and consumer credit is at multi –year highs; the former since Q3 2009 and the latter since Q2 2006.
Over the past two years car sales have been very strong and this trend looks set to continue. The JGFR/GfK Car Financing Plan Index is at its best level since Q2 2006 (118.1) compared to just 54.3 a year ago.
Demand for overdrafts and plastic card borrowing is at well above average levels, with more people returning to plastic card borrowing, In comparison with last quarter there is a weakening of credit www.jgfr.co.uk quality of intending plastic card borrowers. Demand for personal loans is also up on the quarter, although weaker than other consumer credit products.
Since the financial crash people have become more careful in financial behaviour with debt repayment to the fore. While borrowing has surged in the past 3 quarters, debt repayment intention has also seen a sharp spike higher. In the coming months 3 out of 10 adults intend repaying or paying down debt, up from a quarter of adults in Q3 2013.
All connected with the housing market can look forward to a bumper level of enquiries. However with mortgage supply constrained and restricted numbers of properties available for sale, there is likely to be much frustration, especially among buyers needing a mortgage.
Cash buyers will be much better placed although they are likely to meet strong competition for good properties. The JGFR/ GfK Property Buying Index of property purchase intentions jumped to 97.1 its highest score since Q3 2007. In London the Index is 149.1, up from 118.1 in Q3 2013.
By region, housing market demand is strongest in the South West, London, Yorkshire / Humberside and The East Midlands.
Commented John Gilbert, CEO of JGFR: “Retail financial services businesses should have a golden summer with demand across the range of financial products at multi-year highs in many cases. This will put pressure on product supply (especially credit products). Consumers appear to be in recovery mode, driven by improving family finances with Mum, Dad and the extended family playing a vital role in supporting their children's financial needs. A new era in retail financial services is underway”