May 31 2018
Confidence in Borrowing Spring 2018
Filene's annual report on consumers' confidence in borrowing relies on recurring national surveys to measure consumers' attitudes about debt and borrowing. This latest survey indicates that consumer confidence remains relatively constant since the previous survey.
Filene conducts a biannual national survey to gather insights on consumer confidence in borrowing and publishes the results annually. Understanding consumers’ confidence in borrowing helps the credit union system better anticipate the loan market. Recent survey data suggest that although there are few changes among potential loan consumers, the attitudes and reasoning behind consumer decisions are becoming more apparent.
What is this research about?
In comparison with previous survey results, there continues to be little change in consumer confidence. Here are a few exceptions:
- There was a 1% increase overall, among all respondents reporting confidence in taking out debt.
- Forty-one percent of respondents would avoid taking out debt at all costs, suggesting there is a large segment of society that views debt negatively, and this confirms a consistent trend from 2017.
- The analysis reveals clusters of consumers that share similar loan products and attitudes toward borrowing. These “debt owed clusters” provide insights for targeting specific types of loan consumers.
In the nearly two years of conducting this survey, some trends in how consumers view debt have emerged:
- Continuing with previous trends, nearly 50% of respondents would take out debt only if absolutely necessary.
- The most frequently cited reason for not wanting to borrow is the lack of earning potential, followed by worry over sustaining a good credit score and poor economic conditions in the region.
- Among those who would avoid taking out debt at all costs: The most frequently cited reason for avoiding debt is lack of earning potential and poor economic conditions in the region.
- There were slight upticks in the percentages reporting that they might be willing to take on loans if necessary for mortgage, auto loans, and credit card debt. These data may suggest a slow and gradual increase for these types of loans.
- Alternatively, the continued low percentage of respondents reporting they’d take out student loans has not significantly changed. These data might signal a longer-term trend among consumers avoiding financing college with loans.
What are the credit union implications?
Ninety percent of respondents intend to avoid taking on additional debt. This overwhelming lack of confidence suggests that fear and concern remain a legitimate trend for consumer borrowing.
- Credit unions should evaluate their communications to account for prevailing consumers’ attitudes of uncertainty and concern around taking on more debt.
- Insights from debt-owed clusters described in this report are a useful tool for designing targeted communications.
Along with credit unions’ data analytics on consumer loans, this survey offers useful insights into the intentions and beliefs that consumers express when thinking about borrowing as well as general debt.
In concert with the release of this report, we provide you with two documents: the original survey questions and data set used for this research. We invite you to download the two files and explore the data and find relevance to questions you may have about confidence in borrowing!
Filene thanks its sponsor for helping to make this research possible.