When the credit crisis occurred and pushed the global economy into a downward spin there was little expectation that the recovery would be so difficult and take so long.  Consumers are feeling the impact and confidence has hit an all-time low according to a recent study by Nationwide.  Households have dipped into savings, taken out remortgages, and borrowed from retirement funds to help meet the expenses from a stretched budget that is seeing little relief.

Nationwide’s Consumer Confidence Index survey report showed further decline of consumer confidence for the fifth month in a row for October.  The new index level of 36 is down from the previous month’s 48 and the usual average of 78.  Those responding to the survey that were optimistic and expected there to be an improvement of their situation in the next six months amounted to only 13 per cent.  There were only 3 per cent that responded to the survey that reported their current economic situation as “good”.

There has been more forecasting of a possible recession in the future and this has caused a more cautious outlook by lenders.  This could impact the remortgage offers that homeowners will have available to them.  Currently there are very cheap remortgage deals available but those could be pulled soon if outlooks weaken more.

Robert Gardner, Nationwide's chief economist, remarked on the survey saying, "Consumer confidence continued to slide in October, falling by nine points to a new all-time low of 36.

"The index has now fallen for five months in a row, leaving it languishing five points below the previous low of 41 recorded in February this year. The confidence index, which began in May 2004, is now more than 40 points below its long-run average of 78."