Both surveys pointed to a worsening view of household finances and job security. For mortgage advisers, the shift matters because confidence can influence purchase decisions, remortgage behaviour and appetite for fixed-rate products.
Renewed geopolitical tension added to the unease on Monday after the US said it had seized an Iranian cargo ship accused of attempting to breach its blockade. Iran said it would retaliate, raising concerns that a ceasefire between the two countries could fail.
“Many (consumers) were already facing a squeeze on their household budgets at the start of the year with the slowing of wage growth and a cooling jobs market,” said Céline Fenech, consumer insight lead at Deloitte UK. “For consumer sentiment and spending to improve, households will want to see a more certain outlook for the economy.”
Signs of softer conditions are also emerging in housing. Rightmove said asking prices rose by 0.8% month-on-month in April, a smaller increase than is typical for a period when activity often picks up.
“With mortgage rates remaining elevated due to the war in Iran, it’s not a surprise that price growth is proving strongest in parts of the market less exposed to higher borrowing costs, such as top-of-the-ladder homes, while sectors more exposed to interest rates are seeing slower momentum,” said Colleen Babcock, property expert at Rightmove.