Brits turn to crypto to get on property ladder

2021 has been hard on working Brits across the country, with the financial effects of Brexit and the pandemic continuing to have an impact on day-to-day life. 

The reduction in financial support from the government, negligible interest rates and a shortage of food on store shelves mean times are tough. To top it all off, new research conducted by Luno has revealed that more than a quarter (28%) of Brits do not save regularly and nearly one in three say they have no investment plan. 

Despite this, there are positive signs that younger generations are starting to become resourceful when it comes to securing their finances. Data shows young Brits are using their cryptocurrency knowledge to make smart, considered investment decisions to help them enter the highly competitive housing market. 

Saving towards a deposit

The desire to own a home is an aspiration shared by many across the world. For those in the UK however, it’s easier said than done. As the country’s population continues to grow, house builders are struggling to meet demand. The lack of supply has a knock-on effect, increasing prices and hampering first-time buyers.

While there are government schemes in place designed to help first-time buyers, stagnant wages and low interest rates have damaged traditional methods of saving. The investment mentality of UK consumers revealed in our research differs greatly from global attitudes. Just over half (54%) of Brits said that they had invested to increase their wealth, compared to 75% globally, showcasing a stark lack of forward planning amongst UK consumers.

According to figures released by the UK’s Financial Conduct Authority (FCA), about 2.3 million people in the UK own digital assets. Luno’s data reveals that nearly one in five young Brits (aged 18 – 34) who do not currently own cryptocurrency  have considered investing in cryptocurrencies over the past two years. 

In addition to these figures, the FCA has launched a 5-year campaign to reach out to inexperienced investors. The regulator now wants to help investors make the right decisions through its Investsmart campaign. The initiative is part of the agency’s consumer investments strategy with the goal to build investor confidence and limit the number of people falling victim to scams or being enticed to invest in products that are too risky.

The adoption of cryptocurrency as an asset class continues to grow by 113% a year. To put that into perspective, in 1997 the internet was growing at a rate of 63% every year – the fastest at that point. This means that cryptocurrencies are now the fastest growing of any technology in all of human history. 

As wages stagnate and house prices rise, it is understandable that many would consider investing. For example, around one in five Brits surveyed said they were prepared to regularly invest some of their salary into digital currencies within the next five years. Of  those, 56% of 18 -24-year-olds and 36% of 25 – 34-year-olds said such an investment would fund a deposit for a home.

Financial expert Jasmine Birties is not surprised by this sentiment. “Currently, the average house price in the UK costs eight times the average wage, while the interest rates on traditional savings accounts have been negligible for more than a decade,” she said.

“It’s understandable that young people would be looking at cryptocurrencies as a tool to help them save and get on the property ladder.”

Curbing Caution

Despite  interest rates at rock bottom, the most common form of saving amongst Brits who regularly save is Individual Savings Accounts (ISAs), with 48% naming it as their primary saving platform. 

Notwithstanding the cautious approach revealed in our data and tendency to choose traditional methods of saving over investments, the adoption of cryptocurrency in Britain as a mainstream investment continues to rise. Nearly one in ten (9%) of those who haven’t invested yet are considering changing their minds.

With major institutions such as Paypal launching their own crypto-related products in the UK and US, businesses have taken notice of this rise in adoption and are acting on it. Cryptocurrency could also hold the key to helping guide cautious Brits to consider diversifying their portfolios further. Ten per cent of crypto holders who are also regular savers had investment in gold, versus an average amongst general savers of just 3 per cent.

Commenting on the results, Sam Kopelmam, Country Manager for Northern Europe at Luno said that while nationally, the attitudes towards saving are quite traditional, younger generations are looking to make their money work harder with the knowledge that the financial landscape enjoyed by their parents has changed dramatically. 

“Returns from other avenues, such as cryptocurrencies, will likely form a percentage for all portfolios moving forward as these generations look for new opportunities,” he added.

As financial commentators continue to call for greater education in both the UK and the rest of the world, consumers are starting to understand the potentially higher returns cryptocurrencies can provide for their investments and savings. Beyond that, cryptocurrencies can  also diversify portfolios and encourage both young and old to explore alternative investment strategies beyond the traditional, mitigating against inflation and establishing a foundation for a stronger retirement fund. 

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