Spending plans altered as credit crunch hits consumers

Posted: 07 May 2008 14:57:15 GMT

The credit crisis is impacting on people's spending habits, it has been revealed.

The credit crisis is impacting on people's spending habits, it has been revealed.

Research by the Fair Investment Company shows many Britons are feeling the pinch and plan to adapt as a result.

In order to accommodate for increasing mortgage repayments and every day bills, 23 per cent of respondents said they would be cutting down on life's luxuries, 16 per cent will sacrifice a holiday, 13 per cent will switch energy suppliers and four per cent plan to change their mobile phone contracts.

However, 17 per cent do not plan to alter their spending habits at all - a fact that alarms Fairinvestment director David Doulton.

"I am surprised by the percentage of people who do not intend to make any changes to their spending habits; I can only assume that these people either do not have mortgages or are still enjoying a fixed rate.

"As we have seen over the past few weeks, the housing market has, so far, been the worst hit by the credit crisis; lenders have rapidly been pulling their best deals, and the structure of mortgages has been re-arranged to include fees and abnormally large deposits.

"People having to re-mortgage at the moment will undoubtedly be left with less spare cash at the end of the month."

Homeowners have been hit by the lack of available mortgage deals on the market, meaning many are now paying more to service their mortgage than they were this time last year.


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