MADISON, Wis.–A new report suggests that despite strong loan volumes at credit unions, nationally, confidence in borrowing is very low, with more than nine-in-10 adults saying they have no plans to take out a loan over the next six months.
The new report from the Filene Research Institute, titled “Confidence in Borrowing: Survey 2016,” examines national consumer borrowing intentions to show financial institutions, policymakers, researchers and commentators how intention can match with and predict actual borrowing. Research was collected in September 2016, investigating consumers’ borrowing intentions for the next six months, according to Filene.
The report was researched and written by Hope Jensen Schau, professor of marketing, University of Arizona, and Ignacio Luri, doctoral candidate in marketing, University of Arizona, and offers insights on temporal changes in consumers’ borrowing confidence.
“Consumer borrowing is an important macroeconomic measure because it parallels consumer spending and serves as an important measure of consumer confidence and health,” said Schau. “Loan growth is also an important driver of sustainability for credit unions that currently depend on consumer lending and mortgage lending for the majority of their earnings.”
According to Filene, the survey data reveals that national confidence in borrowing is very low, with 93% of the 1,164 U.S. respondents aged 18 and older stating they “do not plan on borrowing” over the next six months.
“Credit unions understand the need to offer members consumer loan products, but may be going about marketing them in the wrong way,” Filene said when releasing the research. “More than 80% of respondents claim they are worried about their current debt. This report provides insights regarding consumers’ fear and worries around borrowing, and provides credit unions with up-to- date, research-based insights to inform their marketing and communications strategies.”
Stressful consumer debt comes in many forms, but healthcare, credit card, and student loan debt ranked at the top, while mortgage loan, entertainment, and auto loan debt were least likely to produce stress.
“Very few people are completely closed to debt, and that is an opportunity for credit unions,” said Luri. “Credit unions should seek to understand more about the reasons for when and how consumers feel confident and try to make borrowing a less stressful topic for their members.”
For more info, the Confidence in Borrowing: Survey 2016 survey can be found here.
This report is an output from Filene’s Center for Consumer Decision Making, which uncovers consumer preferences, trends and behaviors in money management. The research was sponsored by CUNA Mutual Group.