One in five people ‘putting off major purchases as households cut back’

More than half (54%) of people are reducing their energy use and nearly a third (31%) plan to cut back on essentials such as food and clothing, a survey has found.

Around half (51%) are cutting back on “non-essentials” such as eating out and going to the cinema, and 41% are shopping around to find better prices, according to the Building Societies Association (BSA).

Around a fifth (21%) of people surveyed are concerned about rising interest rates and nearly a third (32%) are worried about being able to save for the future.

Some 6% of homeowners said they are worried about paying their mortgage, while 24% of people who are not homeowners are worried about paying housing costs, according to the survey of more than 2,000 people in June.

A fifth of people are putting off bigger purchases like cars, household items and holidays, and a similar proportion (21%) are expecting to use their savings to deal with rising costs.

Just over one in 10 (12%) do not expect to have to make any changes, rising to just over a fifth (21%) of those living in households with incomes of £100,000 or more.

The UK Government recently announced a package of support measures to help households with living costs, with the first cost-of-living payments starting to hit bank accounts from July 14.

The BSA’s research also found consumer confidence in the housing market has declined.

The number of people who think now is a good time to buy a home has slumped to its lowest level (16%) since the BSA started tracking this in 2008.

High house prices, inflation and rising interest rates were common reasons why people think now is not a good time to buy a home.

Paul Broadhead, head of mortgage and housing policy at the BSA, said: “Whilst it’s encouraging that less than one in 10 homeowners are concerned about keeping up with their mortgage payments, this is likely to be because it will take time for bank rate rises to be felt by most borrowers, as around 80% are on fixed rates.

“Borrowers must however start planning for when their mortgage deal ends, as whilst the impact is likely to be quite modest, any increase in expenditure in the current environment will be unwelcome.”