How do MoneySuperMarket customers feel about their finances?

We’re in a unique and privileged position to gauge how Brits are feeling about their finances.

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Millions of consumers use the MoneySuperMarket website every month, looking for the best deals on insurance, energy and financial products.

The actions people take tell us an awful lot about how, in general, they feel about their financial situation.

This information is completely anonymous – it simply records how many people pay annually for their car insurance, for example, or how many are looking for a personal loan to help clear outstanding debt – but it provides a fascinating insight into consumer confidence.

We’ve been logging this data in an index since February 2013, when we set the score at 0. Since then, confidence has grown steadily – but there have been ups and downs along the way.

The past year has been particularly interesting because of the referendum on whether the UK should leave the European Union – something which always seem likely to affect consumer sentiment, one way or another.

In the wake of the announcement of the referendum in December 2015, we saw the beginning of a decline in confidence levels.

Then came the vote itself in June 2016, which triggered first of all a steeper dip in confidence, followed by a rebound as people adjusted to the post-vote reality.

Now the latest data, drawn from our website at the end of October, shows confidence falling yet again – although that could have quite a bit to do with the financial queasiness many of us feel in the weeks leading up to Christmas.

But let’s have a look in a bit more detail at the MoneySuperMarket Consumer Confidence Index.

As noted, it’s based on enquiry data collected on our insurance and financial services channels. The score now sits at 54.84, almost six points lower than July*.

Most indices of this nature rely on consumer surveys, providing a snapshot of sentiment at any given point in time. The MoneySuperMarket index differs because it tracks actual consumer behaviour as visitors interact with the website, for example running quotes for car or home insurance, or a personal loan.

This allows us to produce a live measure of the economic climate as it stands - and calculate a consumer confidence score each month.

The index is an aggregation of five variables. In any given month, some of the variables might indicate improved confidence, whiles others may suggest a decline. It is the combination of these changes that provide the best indicator of consumer confidence.

The variables are:

  • The average annual income of loan enquirers (higher average income levels suggest an increase in confidence). This stands at £38,098 in the November index, a 6.55 per cent rise. It was at £35,755 in July, having reached £40,971 in May.
  • The average motor insurance voluntary excess (Higher excess levels suggest lower levels of confidence as people seek to lower premiums). This now stands at £274.18, having risen 0.17 per cent since the Brexit vote. The current average excess figure is the highest it’s been since January 2016 and £1.71 higher than the same last time last year (November 2015). This increase has contributed towards lower consumer confidence overall.
  • The proportion of home insurance quotes that include homes undergoing building work (a higher figure here suggests an increase in confidence as people are willing and able to invest in their property). This has seen a 3.18 per cent increase compared to July. Across 2016, this figure has been on a generally upward trend and that uplift is continuing.
  • The proportion of loans enquiries searching for loans to cover debt (an increase in this variable is indicative of a decline in confidence). This is at 28.49 per cent, a 4.71 per cent increase since July and the highest it has been since December 2013. 
  • The current average loan amount people are searching for is £10,319, which is £465 higher compared to July, when it stood at £9853, again suggesting a drop in consumer confidence. There has also been a small shift away from people looking for loans for ‘luxury items’, such as cars and holidays.
  • The proportion of car insurance quotes that would prefer to pay annually rather than monthly (annual payments are linked to increased confidence as more people signal they can afford to pay their  premiums upfront, in one go). This figure is currently at 53.84 per cent, having fallen by 1.27 per cent since July (54.5 per cent).

MoneySuperMarket’s confidence index has fluctuated significantly since the Brexit vote. The score following the referendum in July stood at 60.50, its lowest figure for over two years, but it then rallied, rising three points to 63.51 in August and a further two and a half points in September (66.24).

October saw the score drop to 60.69 and another drop sees November’s score stand at 54.84.

However, at this time of year, external factors also come into play. Looking back historically, October is a month where consumer confidence starts to drop as we approach the financial strains of Christmas and start to worry about high winter energy bills.

There are lots of mixed signals about the bigger economic picture at the moment, and that climate of uncertainty is clearly feeding through to how Brits feel about their finances.

We’ll provide regular updates on the movement of the index in coming months during this turbulent time for the UK economy, so that we can see how ordinary consumers are responding.

1 Post Brexit change compares November 2016 Index to July 2016 Index. Namely, October 2016 data to June 2016 data. Based on over three million monthly customer quotes on MoneySuperMarket,

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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