50% of consumers currently wary of making big purchase

According to the latest
Experian-Gallup Personal Credit Index survey, 50 percent of consumers are
uncomfortable making a major purchase such as a home, a car, major appliances or
other significant items over the next three months.

 

In addition, consumer credit
perceptions have been negatively impacted by the subprime mortgage market, the
sharp increase in housing foreclosures and the recent surge in long-term
interest rates.

 

Mortgage Market
Attitudes

"Our survey showed that the highly
publicized subprime mortgage market concern has resulted in some interesting
opinions consumers have regarding how they view subprime mortgages and what
should be done for those who have such loans should they face foreclosure," said
Ty Taylor, president of Experian Consumer Direct.

 

Additional noteworthy results on
consumer attitudes toward the mortgage market include:

  • 58 percent believe the problems in
    the subprime mortgage market will affect the overall mortgage market, while 24
    percent feel the problems will be contained
  • 61 percent of consumers who are very
    familiar with subprime mortgage loans believe the problems in the subprime
    mortgage market will spill over into the overall mortgage
    market
  • 55 percent believe the federal
    government should pass new legislation helping subprime borrowers keep their
    homes and avoid foreclosure

Overall, about 52 percent of
consumers surveyed feel the average price of homes in their area will increase
over the next year, while 29 percent believe prices will remain about the same.
Eighteen percent of consumers expect that prices in their area will
decrease.

 

Among homeowners, 50 percent believe
that average prices will increase, while 32 percent feel they will stay about
the same.

 

Consumer Credit
Perceptions

In January and February of this
year, the Experian-Gallup Personal Credit Index reached a new high at 105. Since
then, consumer credit perception decreased to 87, before rebounding to 95 in
July.

 

Additional survey results on
consumer credit perceptions include:

  • 89 percent of consumers do not plan
    to apply for credit in the next three months
  • 30 percent of households with annual
    incomes of less than $40,000 are uncomfortable with their debt burden, while
    only 16 percent of those with annual incomes of $75,000 or more are
    uncomfortable
  • 17 percent of consumers know someone
    who has been turned down for credit during the past three
    months

"One of the key benefits of the
Personal Credit Index is its ability to provide insight on consumer perception
of the credit markets," said Dennis Jacobe, chief economist of The Gallup
Organization. "Consumers are already decreasing their credit use. If regulators
and the banks they regulate also decrease their credit use – and longer-term
interest rates go higher – consumer credit purchases and the support they
provide for the overall economy are likely to decline significantly in the
months ahead."

 

More information about the
Experian-Gallup Personal Credit Index can be found on the official Web site at
http://www.personalcreditindex.com/.

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