Mortgage crisis hits consumer confidence

Consumer confidence is under threat from the increasing likelihood of recession and poor performance in the housing market, according to Nationwide.

New research by the mortgage lender shows falling house prices and the increasing cost of living are causing consumers to reign in their spending.

And Nationwide''s chief economist Fionnuala Earley said that despite leading lenders reducing the cost of fixed-rate mortgages, consumer confidence remains nearly half what it was last year.

She said: "The continuing downward trend in consumer confidence is not surprising given the recent batch of poor economic data.

Adding: "Lower fixed mortgage rates offer some good news, but a cut in the bank base rate is still unlikely this summer."

Consumer confidence plummeted by 18 per cent last month and Nationwide''s House Price Expectations index predicts a 4.8 per cent drop in housing growth over the next six months.

The Centre for Economic and Business Research expects property prices to drop by eight per cent this year and four per cent next year.

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