Loan trends show decrease in consumer confidence, MoneySuperMarket says

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Households' financial confidence took a knock in early June during the days surrounding the General Election, an index suggests.

MoneySuperMarket said its analysis of consumers' interaction with its website found there was a jump in people looking for loans to cover debt and a decrease in the proportion of homes undergoing building works.

Looking at customer enquiry and application data across loans and insurance, the website found that during the first two weeks of June, compared with the same period during the previous month, there was a 4% increase in the proportion of people looking for loans for debt, a 7% decrease in the proportion of homes undergoing building works and a 6% decrease in the annual income of people searching for loans.

These trends suggest a decrease in consumer confidence, MoneySuperMarket said.

MoneySuperMarket's index calculates an overall consumer confidence score each month, based on the actual behaviour of people as they interact with its website, such as running quotes for car or home insurance, or a personal loan. 

The overall score for mid-June was 43.87, meaning the index was down over three points compared with the end of May, when the score was 47. Confidence was also down by 16 points compared with a year earlier.

The website said that aside from February last year, consumer confidence is now at its lowest since December 2013. It said that if the downward path continues, the end of June could see the score hit its lowest point since MoneySuperMarket introduced its index in January 2013.

Households are facing a tighter squeeze on their spending power. The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation reached 2.9% in May, up from 2.7% in April and the highest level since June 2013.

Highlighting the potential impact of the hung parliament General Election result and Brexit on people's financial behaviour, Kevin Pratt, a consumer affairs expert at MoneySuperMarket, said: "It seems the only thing we can be certain of at the moment is continued uncertainty. If this is to be the 'new normal', the impact on how confident we feel about our finances will be profound indeed."