People are choosing to tackle their debts, despite the pinch being applied to pockets by the continuing recession, new research has revealed.
According to the Association of British Insurers (ABI), the third quarter of this year saw a third of people begin paying off their non-mortgage debt, such as credit cards, or increase their rate of repayment, compared with just over a quarter in the previous three month period.
Optimism about the economic outlook had grown too, jumping to its highest level since the survey began a year earlier. Just over half (52%) of those questioned expected the economy to improve over the coming year, compared with 36% who felt the same way in the second quarter of the year, and only 12% with similar optimism this time last year.
Meanwhile, sentiment regarding the housing market also continued to grow, with property considered to be the best long term investment by more than half (54%) of those surveyed, the highest figure the survey has recorded.
"For the long term health of the economy, it is encouraging that more people are reducing their debts," said Dr Rebecca Driver, the ABI's director of research and chief economist. "Increasing confidence in the value of property is also good news for the housing market."
However, savings levels still remain a concern, after it was found that around 40% of people are putting away too little or nothing at all for their retirement.
"This is very worrying," added Dr Driver. "The ABI's recently published Savings Manifesto outlines proposals, such as early access to pension saving and bringing forward automatic enrolment into workplace pensions, designed to give savings a much-needed boost."
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