Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Life After Debt
- A problem that will blight a generation?
- Apportioning the blame
- Just a stage they’re going through?
- Boom Comes To An End
- Cutting back…
- …but it’s not time to panic
- Boring – but vital
- The importance of budgeting
- Education – financial as well as social rewards
- From borrowing to saving
- The intentions are good…
- …but can they maintain momentum?
Market in Brief
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- New lending tails off – finally
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- Figure 1: Outstanding lending to individuals, 1993-2008
- Despite the slowdown, most are still making ends meet…
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- Figure 2: Current financial position, April 2009
- …but the burden of debt is starting to be felt
- More debts, more problems
- Most manage their spending pretty well
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- Figure 3: Money management skills, April 2009
- Impulsive? Or virtuous?
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- Figure 4: Financial management target groups, April 2009
- Cutting back on spending to cover the credit card bills
- Housing equity withdrawal turns negative…
- …while credit card lending remains steady
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- Figure 5: Gross and net credit card lending, 2004-09 (not seasonally adjusted)
Household Debt in Context
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- Key points
- Have we reached the summit of the debt mountain?
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- Figure 6: Outstanding lending to individuals, 1993-2008
- Figure 7: Growth in outstanding lending to individuals, 2003-08
- Outstanding balances start to shrink
- Borrowing races ahead of PDI
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- Figure 8: Outstanding lending to individuals as a proportion of PDI, 1993-2008
Changing Economic Environment
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- Key points
- The recession starts to hit home…
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- Figure 9: UK Gross Domestic Product, 2004-09
- …and unemployment takes a turn for the worse
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- Figure 10: Number of unemployed people, Q1 1993-Q1 2009
- Mixed news on employment
- Low base rates limit the damage…
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- Figure 11: Bank of England base rate and three-month LIBOR, 2007-09
- …but only help a few
The Crunch Effect – Continued
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- Key points
- The credit crunch continues to have a huge impact
- Low interest rates moderate the remortgage issue…
- …although rates on unsecured credit are increasing
- A spirit of prudence returns?
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- Figure 12: Changing attitudes towards money management, January 2007-December 2008
- Time to clear those debts…
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- Figure 13: Consumer financial activity, 2002-09
- …or forced to build them up again?
- Not all have been affected
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- Figure 14: Trends in the impact of the economic downturn on consumers, December 2008-June 2009
- It’s not what you know, it’s who you know
- A degree of optimism?
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- Figure 15: Trends in consumer sentiment for the coming year, December 2008-June 2009
- Availability of finance
The Over-Extended Consumer
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- Key points
- Write-offs increase – but don’t soar
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- Figure 16: Quarterly write-offs of lending to individuals, 2004-09
- Repossessions – not as bad as initially feared?
- Bankruptcies hit new levels
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- Figure 17: Individual insolvencies in England and Wales, 2004-09
- Changing attitudes towards bankruptcy?
- Generation debt – advice charities feel the strain
The Mortgage Market
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- Key points
- The mortgage market shuts down…
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- Figure 18: Gross and net mortgage lending, 2004-09 (not seasonally adjusted)
- …and even shifts into reverse gear
- Little faith in future price rises
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- Figure 19: Expected growth in house prices, 2007-09
- Housing equity withdrawal turns negative
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- Figure 20: Housing equity withdrawal (not seasonally adjusted), 1999-2009
- The end of the property piggy bank
Consumer Credit
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- Key points
- Credit cards still mainly used as revolving credit…
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- Figure 21: Gross and net credit card lending, 2004-09 (not seasonally adjusted)
- …but personal loan balances continue to grow
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- Figure 22: Gross and net consumer credit (excluding credit card lending), 2004-09 (not seasonally adjusted)
- Loans hit by cheap mortgage finance…
- …and then the slowdown
The Consumer – Financial Situation
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- Key points
- Most are still getting by…
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- Figure 23: Current financial position, April 2009
- …but how much slack is there in household budgets?
- The less affluent are far less confident
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- Figure 24: Current financial position, by gender, age and socio-economic group, April 2009
- An easy retirement?
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- Figure 25: Current financial position, by lifestage and gross household income, April 2009
- Flying south for the winter
The Consumer – Credit Ownership
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- Key points
- Most have some kind of outstanding credit…
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- Figure 26: Products on which respondents currently owe money, April 2009
- …with a quarter holding multiple types
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- Figure 27: Repertoire of types of credit currently outstanding, April 2009
- Credit – only a problem if you can’t control it?
- Borrowers feel the pinch
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- Figure 28: Current financial position, by types of credit outstanding, April 2009
- A generational shift
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- Figure 29: Outstanding credit, by gender, age and socio-economic group, April 2009
- Credit’s useful – as long as you don’t need it
The Consumer – Level of Unsecured Debt
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- Key points
- One in ten owe have more than £10,000 in unsecured debt
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- Figure 30: Money owed on unsecured debts, April 2009
- Struggling at the margins
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- Figure 31: Current financial position, by money owed on unsecured debts, April 2009
- Borrowing their way into trouble
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- Figure 32: Money owed on unsecured debts, by demographics, April 2009
- More strain on the family budget
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- Figure 33: Money owed on unsecured debts, by demographics, April 2009
The Consumer – Level of Secured Debt
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- Key points
- High mortgages are the exception, not the norm
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- Figure 34: Money owed on secured/mortgage-related debts, April 2009
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- Figure 35: Current financial position, by money owed on secured/mortgage-related debts, April 2009
- The cost of climbing the ladder
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- Figure 36: Money owed on secured/mortgage-related debts, by demographics, April 2009
The Consumer – Borrowing, Saving and Managing Money
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- Key points
- Paragons of financial virtue?
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- Figure 37: Money management skills, April 2009
- Reaping the rewards of responsible budgeting…
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- Figure 38: Current financial position, by positive attitudes towards money management skills, April 2009
- …and the financial implications of a lack of organisation
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- Figure 39: Current financial situation, by negative attitudes towards money management skills, April 2009
- The ‘denial’ approach to managing debt
- Mortgage holders – managing their responsibilities?
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- Figure 40: Money management skills, by money currently owed, April 2009
- The polarisation of consumer credit
- Experience, or a generational shift?
- The student loan generation
- Affluent enough to take a few risks?
The Consumer – Attitudes and Expectations
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- Key points
- Time to cut back borrowing?
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- Figure 41: Impact of the slowdown, April 2009
- Credit rationing – only a problem for a minority
- The view from the ivory tower
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- Figure 42: Impact of the slowdown, by current financial position, April 2009
- The stretched are concentrating on clearing debts
- A third of mortgage holders are feeling the benefit
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- Figure 43: Impact of the slowdown, by money currently owed, April 2009
- Reality hits for the over-extended?
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- Figure 44: Impact of the slowdown, by money owed on unsecured debts, April 2009
The Consumer – Segmenting the Population
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- Key points
- Most manage their finances with only the occasional glitch
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- Figure 45: Financial management target groups, April 2009
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- Figure 46: Attitudes towards financial management, by financial management target groups, April 2009
- Young and carefree
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- Figure 47: Financial management target groups, by gender, age, socio-economic group and lifestage, April 2009
- Is virtue its own reward?
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- Figure 48: Current financial position, by financial management target groups, April 2009
- Banks reducing options for the Impulsive?
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- Figure 49: Impact of the slowdown, by financial management target groups, April 2009
- Anything for an easy life
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- Figure 50: The slowdown segmentation, April 2009
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- Figure 51: Attitudes towards the slowdown, by the slowdown segmentation, April 2009
- Dreaming of a return to traditional banking values
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- Figure 52: The slowdown segmentation, by gender, age, socio-economic group and lifestage, April 2009
Appendix – The Consumer – Financial Situation
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- Figure 53: Current financial position, by demographics, April 2009
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Appendix – The Consumer – Credit Ownership
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- Figure 54: Repertoire of money currently owed, by money currently owed, April 2009
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- Figure 55: Most popular money currently owed, by demographics, April 2009
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- Figure 56: Next most popular money currently owed, by demographics, April 2009 (continued)
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Appendix – The Consumer – Level of Debt
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- Figure 57: Money owed on unsecured debts, by demographics, April 2009
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- Figure 58: Most popular money owed on secured/mortgage-related debts, by demographics, April 2009
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- Figure 59: Next most popular money owed on secured/mortgage-related debts, by demographics, April 2009 (continued)
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Appendix – The Consumer – Borrowing, Saving and Managing Money
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- Figure 60: Most popular money management skills, by demographics, April 2009
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- Figure 61: Next most popular money management skills, by demographics, April 2009 (continued)
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- Figure 62: Most popular money management skills, by money currently owed, April 2009
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- Figure 63: Next most popular money management skills, by money currently owed, April 2009 (continued)
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Appendix – The Consumer – Attitudes and Expectations
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- Figure 64: Most popular impact of the slowdown, by demographics, April 2009
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- Figure 65: Next most popular impact of the slowdown, by demographics, April 2009 (continued)
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Appendix – The Consumer – Segmenting the Market
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- Figure 66: Money management target groups, by demographics, April 2009
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- Figure 67: Slowdown segments, by demographics, April 2009
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