The second quarter of the year has seen some unexpected shifts in consumer borrowing, spending and saving behaviors. This is largely in response to minimal spending and investment from government and the private sector during election season and the impacts of global economics. This article outlines how Filipino households are tightening their belts, watching their credit scores and reviewing their discretionary spend.
Household income and spending
Nearly half (43%) of respondents reported an increase in household income in the last 3 months, 56% saved more in emergency funds and 81% expected their income to increase in the next 12 months.
Little change was reported in terms of ability to meet financial obligations: 46% of households were able to pay their bills and loans in full; 46% used savings to maintain payments; 42% intended to pay a partial amount only; and 40% borrowed from family or friends.
While only 22% increased discretionary spending, 43% reported cutting back discretionary spending, 48% expected to spend more on bills and loans, and most consumers (61%) expected large purchase spending to decrease or stay the same.
Financial inclusion and participation
Most respondents (96%) believed access to credit is important, but 27% claimed insufficient access to credit. Across generations, 55% of Baby Boomers felt positive about access to credit and lending products.
More than half (55%) of respondents planned to apply for new credit within the next year, led by of Baby Boomers (62%).
In the next 12 months, 53% expected to apply for new personal loans, 41% for new credit cards, and 35% planned to apply for a new mortgage or home loan. Notably, more Millennials and Gen X were planning to apply for personal loans at 63% and 50%, respectively.
Over half (59%) of respondents who considered applying for new credit or refinancing existing credit decided not to; 32% cited the high cost of new credit or refinancing, and 30% anticipated rejection due to income or employment status.
Financial awareness and empowerment
Half of Baby Boomers and nearly half of Millennials (45%) believed monitoring credit is extremely important. Most (95%) consumers believed monitoring credit is important — with 53% checking their credit at least once a week.
Many consumers (54%) believed their credit scores would increase if businesses used information not on the standard credit report. Baby Boomers (64%) believed their credit scores would increase, while Gen X (11%) believed their credit scores would go down.
Fraud and identity protection
Close to half (44%) of consumers were unaware of any fraud schemes targeted at them; 45% were targeted but didn’t become a victim, and 11% became victims. Generationally, nearly half (48%) of Gen X were not aware of being targeted compared to Gen Z (43%) and Millennials (43%). However, 36% of Baby Boomers reported falling for fraudulent schemes.
At 42%, phishing remained the top fraud scheme followed by money and gift card scams (39%) and third-party seller scams on legitimate online retail websites at 31%.
Most consumers (90%) were concerned with sharing personal information, while (77%) expressed worry about invasion of privacy, having their identity stolen (70%) and receiving unsolicited marketing (41%).
Contact your TransUnion representative to learn how we can help your business navigate the shifting consumer landscape.