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1.1 Four cluster characterization: 2009 (n=646)

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James Arthur Cattell edited this page May 26, 2015 · 1 revision

#Four cluster characterization: 2009

Propose that the four clusters identified reflect the following four 'typologies' in terms of financial security

  • Cluster 1: Highly Secure (51% of sample) Keeping up without much difficulty in bills and mortgage payments, unconstrained in ability to get credit, not cutting back on spending, generally do not need to take any action to resolve payment commitments.
  • Cluster 2: Secure but worried (22%) Similar to Cluster 1, but distinguished by higher rates of concern about ability to get credit.
  • Cluster 3: Struggling to keep up (12%) Difficulty in mortgage payments, cutting back on spending, but not concerned over ability to get credit. Majority of households responded that they are struggling from time to time.
  • Cluster 4: Falling behind (15%) Similar to Cluster 3, but highest proportion of households responding that they are falling behind or constantly struggling, feel most constrained in ability to get credit.

Clusters 1 and 2 can be said to belong to same supercluster (Secure Households), likewise for clusters 3 and 4 (Insecure Households). Using multidimensional scaling (MDS) we can visualise the relative position of households to each other:

1. Difficulties paying for house in last year

Clusters 1, 2 & 3 are generally keeping up with mortgage payments with Cluster 4 struggling

2. How well are you keeping up with bills or credit commitments?

A large proportion of Cluster 1, and half Cluster are keeping up with bills without any difficulty. The majority of Cluster 3 and the majority of Cluster 4 are keeping up but struggling from time to time. Almost a quarter of Cluster 4 are in a constant struggle and 12.5 % have fallen behind

3. Put off spending because of concern that unable get credit

Cluster 1 and 3 have no concerns over putting off spending whereas Clusters 2 and 4 do.

4. Would like to borrow more but too expensive or difficult

Similarly to the previous spending concerns Cluster 1 & 3 not concerned over borrowing whereas 2 & 3 are.

5. Actual or Perceived credit constraint

Consistent with the previous two graphs.

6. Cutting back on spending

A large proportion of Cluster 3 & 4 are cutting back on spending, whereas nearly all of Cluster 1 & 2 are not.

7. Reasons for Difficulties in Bills and Credit status

Cluster 1 and 2 are less impacted by loss of income, employment and higher than expected bills compared to Cluster 3 & 4, however this may just be a reflection of Cluster 1 & 2 not having difficulties overall.

Loss of Income

Unemployment

Higher than expected household bills

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