According to studies by Lloyds TSB Mortgages and Engage Mutual, the credit crunch crisis will affect consumer spending as Christmas approaches.
Research from Lloyds TSB Mortgages shows that 64 per cent of people that have remortgaged their property will make cutbacks this Christmas in order to meet higher mortgage repayments. Meanwhile, 71 per cent of remortgagers are anticipating increased monthly mortgage repayments when their current deal comes to an end.
The study included more than 1,000 homeowners who are due to remortgage before the end of the year and focused on the ways these people are planning to deal with rises. A reduction in Christmas spending came top of the list, with more than three quarters of under 25s saying they will be making cutbacks over the festive period. A further 51 per cent said they are hoping to lower household bills and would potentially change suppliers in order to hep reduce costs.
Director of network mortgage sales at Lloyds TSB, Alison Burns, says:
“Cutting back on festive spending offers a short-term solution but it’s a good idea for people with mortgages to take a longer-term view of their financial situation to ensure their mortgage is suited to their specific needs and changing circumstances."
"Some consumers may prefer a stepped rate deal that allows them to ease into the new higher interest rate environment. Other homeowners might opt for a tracker product, which will enable them to benefit from any potential drops in interest rates,” she adds.
Furthermore, Engage Mutual found that people are sacrificing luxuries and working more hours in order to give loved ones what they want this Christmas. Its research shows that 88 per cent of people in a relationship where finances are shared would make sacrifices to ensure that their partner did not have to.
Almost one in three people in a relationship expect to reduce spending on clothes and luxuries for themselves for the sake of their partner and 22 per cent would be prepared to go out less. However, just 7 per cent would be prepared to take on debt to support partners’ needs compared with 21 per cent who spend money from savings accounts.
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