Rises in interest rates dampens consumer confidence

The latest Woolwich Consumer Confidence Index shows a three per cent fall this July.

The Woolwich index shows that 62 per cent of homeowners believe their property will continue to increase in value compared to 65 per cent in June and 67 per cent in May. Despite the downward trend consumer confidence is significantly higher than this time last year (July, 2003) when it was at 55 per cent.

Andy Gray, head of mortgages at Barclays and The Woolwich, said: "This continued fall confirms our prediction that confidence would gradually decline as interest rate rises bite and people become more cautious about borrowing decisions.

"With a rate rise predicted this Thursday and a further rise before the end of the year we would expect this downward trend to continue until the end of the year."

Confidence in London fell by 4 per cent, which is higher than the national average. Confidence was lowest in Scotland (58 per cent) but remained buoyant in the South West (67 per cent)

Barclays and The Woolwich anticipate two 0.25 per cent interest rate rises by the end of this year and would advise consumers to review their finances in light of future increases.