Arvest survey: Arkansans ‘cautious’ about adding new debt

Consumers in Arkansas report having less existing mortgage debt and higher overall savings rates than their neighbors in Missouri and Oklahoma, according to the third phase of the Arvest Bank’s Consumer Sentiment Survey completed for the fall of 2014.

Home ownership numbers decreased in the recent survey which was completed in October. Arkansas respondents holding a home mortgage fell six points to 31% in October, down from 37% in June’s survey. Additionally, only 3% of Arkansans said they plan to get a home mortgage in the next six months.

More Arkansas households are focused on savings as evidenced by the state’s household savings rate which rose from 9.5% in the June survey to 11.9% most recently. While the percentage of those planning to increase their savings rate dropped from 23% to 18%, the number of those planning to maintain their current rate increased to 71% of respondents.

“In Arkansas, there was a marked decline in the number of respondents indicating that they have existing mortgage debt,” said Kathy Deck, director of the Center for Business and Economic Research (CBER) at the University of Arkansas. “When this response is combined with that of higher savings rates and the intent to maintain those savings rates, a reasonable interpretation is that Arkansans remain cautious and conservative about taking on new debt.”

The survey also revealed that Arkansas consumer debt is below that of their neighbors in Missouri and Oklahoma in mortgage and home equity.
• Arkansas: Mortgage 31%, home equity 4%
• Missouri: Mortgage 36%, home equity 8%
• Oklahoma: Mortgage 34%, home equity 6%

Student loan debt reported by the survey respondents indicated that 12% of Arkansas and Oklahoma consumers are carrying it, while 17% of Missouri respondents do so.

SPENDING HABITS
Arkansas consumers saving more money are spending less on major household purchases. According to the recent survey just 36% of Arkansans said they have made a major household purchase in the last six months, down 3% from June. That includes items like furniture, televisions and refrigerators. 

Most Missouri respondents indicated they have not made a major household purchase in the past six months. Only 35% reported making such a purchase, down from 38% in June.

The same was true in Oklahoma as more respondents indicated they have not made a major household purchase in the past six months. Only 38% said they had made a large household purchase, down from 43% in June.

The October survey also found that in Arkansas 26% of respondents do plan to make a major household purchase in the next six months. The others said they were waiting until the right time to buy and did not want to comment to a certain time period.

This buy attitude was seen in 27% of Missouri respondents and in 22% of Oklahoma respondents that were committed to making a major purchase in the next six months.

“Arkansas consumers seem to be serious about saving, which almost always is a good idea,” said Steve Burkhead, vice president and location manager at Arvest Asset Management in Washington County. “It also appears they are waiting to make major expenditures at a time that is best for them. We’re encouraged by that kind of forethought, and are ready and willing to help our customers plan their future financial path no matter what it might entail.”

FUTURE HABITS
Deck said consumers have more cash in their pockets from lower gas prices and she expects they will spend the majority of that money whether it’s for entertainment or purchasing small items. She said consumers seem to be more hesitant about taking on longer term debt and the added $50 to $75 per month in their pockets won’t likely change that.

For the first the time the survey asked respondents about their intentions to acquire credit in the next six months and any problems they expect in doing so.

3% of Arkansas and Oklahoma respondents said they plan to acquire a home mortgage in the next six months. This compared to 2% of respondents in Missouri. Roughly 5% of respondents in the region and in Arkansas said they plan to acquire credit to buy a car, while 4% of regional respondents said they will add to credit card debt. 

The vast majority of respondents (70%) said they have no plans to acquire any credit in the next six months. There was 5% regionally who said they did expect some difficulties in acquiring new loans.