UK Personal Loans Market Report 2022

The UK Personal Loans report identifies consumer attitudes towards market performance, ownership of unsecured loan products, and future borrowing plans in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Personal Loans market in the UK.

Current Market Landscape

Inflation pressures will have a disproportionate effect on lower income groups who will find it much harder to cope with rising prices, given that they have relatively little slack in their budgets. While some people in these groups might be wary of taking out a personal loan, others will be forced to consider this option to make ends meet. Those who are struggling have limited credit options and many will turn to high-cost credit solutions with lenders who specialise in the sub-prime market.

• 33% of adults think that loan providers can’t be trusted to be transparent about fees, while 77% think that early repayment charges should be made clearer.
• 15% of those who are considering taking out a loan in the next 12 months would take out one to pay for the things they need.
• 20% of those considering taking out a loan in the next 12 months cite home improvements as the main reason for a loan.

If consumers can’t be confident about fees and costs, they are less likely to consider the product, and a lack of flexibility over early repayment will push more people towards revolving credit products. Addressing this issue is important for lenders if they are to build more engagement with the product and shift consumers away from other familiar forms of credit.

Future Market Trends in Personal Loans 

The pandemic and successive lockdowns drastically impacted this sector, limiting spending opportunities and reducing the need and willingness to make big-ticket purchases. Economic uncertainty led to faltering consumer confidence, which also drove down demand for personal loans. Economic growth and higher consumer spending should help to drive growth in the loans market. However, loan providers will also need to ensure their products are well placed to compete with more flexible borrowing solutions as consumers will continue to take a cautious approach to their finances.

This is likely to sustain demand for borrowing as people will continue to reassess and try to improve their homes. Marketing loans alongside DIY and other home improvement service could prompt more people to consider their plans and possibly upgrade to bigger projects with the help of additional funds.

Read on to discover more details or take a look at all of our UK Financial Services market research.

Quickly understand

• Market performance, including a five-year market forecast.
• An analysis of competitive strategies and launch activity.
• Ownership of unsecured loan products.
• Method of arranging personal loans.
• Behaviours towards personal loans.
• Future borrowing plans.
• Attitudes towards personal loans.

Covered in this report

Brands: Lloyds Banking Group, NatWest Group, HSBC, Barclays, Santander, Nationwide, Virgin, Tesco Bank, Sainsbury’s Bank, Metro Bank, Vanquis Bank, Zopa, Tandem Bank, Revolut, Experian, Novuna Personal Finance (Hitachi Personal Finance).

Expert analysis from a specialist in the field

This report, written by Stefania Apostol, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The pandemic and successive lockdowns drastically impacted the personal loans sector, limiting spending opportunities and reducing the need and willingness to make big-ticket purchases. Consumers will remain cautious about their spending and borrowing as the cost of living rises. However, some people will have to consider personal loans to make ends meet. Demand for personal loans is also likely to be sustained by home improvements, as people will continue to reassess and try to improve their homes.

Stefania Apostol
Financial Service Analyst