Thursday 22 February 2018

Rising rents and long delay for Government deal dented confidence in saving

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Charlie Weston, Personal Finance Editor

RISING rents and the long delay in forming the Government dented confidence in saving.

The level of people who felt it was a good time to save in May, and that government policies encouraged saving, fell to its lowest point since December 2015.

Both the over-50 and under-50 age groups saw their confidence in saving fall, May’s Nationwide UK (Ireland) Savings Index showed.

This was despite the overall savings index rising to 119 from 113.

And the level of people who felt good about the amount they can save rose to 130 in May from 107 in April.

The savings environment sub-index, which asks respondents if they feel now is a good time to save and whether government policy encourages saving, fell to 108 points in May from 119 points the previous month. That was the lowest reading in the index since December 2015.

Managing Director of Nationwide UK (Ireland) Brendan Synnott, said: “In May savers faced a number of issues. The Government had just been formed and people lacked certainty as to what its policies might look like or how it would perform given it is a minority government.

“This appears to be having an impact on people’s view of whether it is a good time to save.”

He said the increase in rent levels across the country was also contributing to uncertainty regarding savings.

Average rental costs nationwide hit €1,000 for the first time since the housing boom in 2007.

Mr Synnott added: “The May savings index is at its lowest reading so far this year. As the government beds in it will be interesting to see how the index performs going forward.’’

The percentage of those who said they would use the extra to pay off debts, including their mortgage, fell to 40.3pc in May from 44.6pc in April.

Some 10.3pc of respondents said they planned to spend the extra money, down from 10.9pc in April.

The proportion of respondents who said they would choose to save the money increased in May to 38.7pc from 36.5pc in April.

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