Table of Contents
Introduction
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- Abbreviations
- Fieldwork methodology
Executive Summary
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- Credit ownership
- Seven in ten have outstanding credit
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- Figure 1: Types of credit held, May 2012
- Some 30% have unsecured debts of more than £5,000
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- Figure 2: Outstanding unsecured debt, May 2012
- Almost 50% with secured debts owe less than £70,000
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- Figure 3: Outstanding secured credit, May 2012
- Trends in lending
- Net unsecured lending remains subdued
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- Figure 4: Gross and net unsecured lending to individuals, January 2002-April 2012
- Mortgage lending has stabilised
- Levels of indebtedness appear to have fallen
- Credit and the economic downturn
- Most people are trying to avoid borrowing and credit
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- Figure 5: Impact of the economic downturn on attitudes towards debt and credit, May 2012
- Attitudes towards credit
- The majority see themselves as responsible users of credit…
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- Figure 6: Attitudes towards own debts, May 2012
- …but have concerns about the way others use credit
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- Figure 7: Agreement with general attitudes towards debt, May 2012
- Payday loan and door-to-door lenders are widely seen as irresponsible
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- Figure 8: Assessment of lender responsibility, by credit type, May 2012
- What we think
Issues in the Market
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- Is the appetite for credit starting to return?
- To what extent is the cautious consumer mindset here to stay?
- Is consumer indebtedness getting worse?
- Are people taking personal responsibility for their debts and financial situation?
- To what extent are credit providers seen as responsible?
Future Opportunities
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- Selling the concept of credit to a more prudent generation
- Don’t be afraid to say no
- Leading the way on responsible lending
Economic Outlook
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- Key points
- Fears of a double-dip recession become a reality
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- Figure 9: UK GDP, Q1 2008-Q1 2012
- Downturn in inflation should ease pressure on household budgets
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- Figure 10: RPI and average weekly earnings, 2006-12
- Savings ratio fluctuates as households face inflationary pressures
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- Figure 11: Savings ratio, 2006-12 (Q1)
- Unemployment rate has increased over the last 12 months
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- Figure 12: UK headline unemployment rate, 2008-12
Financial Wellbeing
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- Key points
- Around one in ten are in some level of financial difficulty
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- Figure 13: Current financial situation, May 2012
- Some signs of improvement in sentiment
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- Figure 14: Trends in current financial situation, November 2009-May 2012
- Proportion struggling remains fairly consistent
- More than a fifth are anxious about financial future
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- Figure 15: Consumer sentiment for the coming year, May 2012
- Financial anxiety has increased
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- Figure 16: Trends in consumer sentiment for the coming year, November 2009-May 2012
- More than 80% have been affected by the downturn
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- Figure 17: Impact of the economic downturn, May 2012
- Impact of downturn has remained broadly consistent
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- Figure 18: Trends in the impact of the economic downturn, December 2009-May 2012
Consumer Credit Lending
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- Key points
- Consumer credit lending is edging upwards
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- Figure 19: Gross and net unsecured lending to individuals, January 2002-April 2012
- Credit cards are primarily used as a payment tool
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- Figure 20: Gross and net credit card lending, 2006-11 (seasonally adjusted)
- Demand for other forms of consumer credit remains weak
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- Figure 21: Gross and net other consumer credit lending, 2006-11 (seasonally adjusted)
Mortgage Market Lending
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- Key points
- Mortgage lending shows marginal increase in 2011
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- Figure 22: Gross and net mortgage lending, 2006-11 (seasonally adjusted)
- Property still seen as a good long-term bet
- Injection of housing equity continues
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- Figure 23: Housing equity withdrawal, 2005-12 (seasonally adjusted)
Write-offs, Repossessions and Arrears
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- Key points
- Some stability in mortgage arrears and repossessions…
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- Figure 24: Mortgage arrears and repossessions, Q1 2008-Q1 2012
- …but there are signs that repossessions could rise in the future
- Write-offs fell by 30% in 2011
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- Figure 25: Write-offs of loans to individuals, 2006-11
- Individual insolvencies appear to be in decline
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- Figure 26: The number of individual insolvencies in England and Wales, by type, Q2 2009-Q1 2012
Credit Ownership
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- Key points
- Seven in ten have some form of outstanding credit
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- Figure 27: Types of credit held, May 2012
- Nearly a quarter have three different types of outstanding credit
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- Figure 28: Repertoire of types of credit held, May 2012
- Figure 29: Types of credit held, by repertoire of types of credit held, May 2012
- Those with exposure to multiple forms of credit are more likely to be struggling
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- Figure 30: Current financial situation, by repertoire of types of credit held, May 2012
- 24-44-year-olds more likely to have several forms of credit
Level of Outstanding Debt
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- Key points
- A third of those with unsecured debts owe less than £1,000
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- Figure 31: Outstanding unsecured debt, May 2012
- Personal loan holders are more likely to owe at least £3,000
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- Figure 32: Types of credit held, by outstanding unsecured debt, May 2012
- Ownership of multiple credit products leads to larger debt burden
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- Figure 33: Outstanding unsecured debt, by repertoire of types of credit held, May 2012
- Link between financial health and unsecured debt
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- Figure 34: Outstanding unsecured debt, by current financial situation, May 2012
- Only 6% of those with secured debts owe more than £200,000
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- Figure 35: Outstanding secured credit, May 2012
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- Figure 36: Outstanding secured credit, by annual household income, May 2012
- Link between secured and unsecured debts
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- Figure 37: Outstanding unsecured debt, by outstanding secured credit, May 2012
Credit and the Economic Downturn
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- Key points
- Seven in ten are trying to limit their exposure to credit
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- Figure 38: Impact of economic downturn on finances, May 2012
- Even those in a good financial position are reluctant to use credit
- Mortgage holders are more wary about using credit
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- Figure 39: Impact of economic downturn on finances, by most popular types of credit held, May 2012
- Multiple credit holders are being more careful about their spending
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- Figure 40: Impact of economic downturn on finances, by repertoire of types of credit held, May 2012
- Two fifths have actively tried to reduce their debts
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- Figure 41: Impact of the economic downturn on attitudes towards debt and credit, May 2012
- Different age groups take different approaches to shore up their finances
- Unsecured credit used to prop up household finances for the minority
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- Figure 42: Types of credit held, by impact of the economic downturn on attitudes towards debt and credit, May 2012
- Multiple credit holders are keen to reduce their exposure to debt
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- Figure 43: Impact of the economic downturn on attitudes towards debt and credit, by repertoire of types of credit held, May 2012
Attitudes Towards Personal Debt
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- Key points
- Credit users strive to be seen as responsible…
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- Figure 44: Attitudes towards own debt(s), May 2012
- …but almost two fifths have some concerns about being in debt
- The tipping point – £3,000 in unsecured debts
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- Figure 45: Attitudes towards own debt(s), by outstanding unsecured debt, May 2012
- Multiple credit users are more likely to have concerns
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- Figure 46: Attitudes towards own debt(s), by repertoire of types of credit held, May 2012
- Forced borrowers are more likely to bury their heads
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- Figure 47: Attitudes towards own debt(s), by impact of the economic downturn on attitudes towards debt and credit, May 2012
General Attitudes Towards Debt and Credit
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- Key points
- A strong sense that credit is often used for the wrong reasons
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- Figure 48: General attitudes towards debt and credit, May 2012
- There is a time and a place to use credit
- Older consumers are more concerned about the use of credit
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- Figure 49: General attitudes towards debt and credit, by age, May 2012
- Higher earners are more likely to see positive benefits of credit
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- Figure 50: General attitudes towards debt and credit, by annual household income, May 2012
- Credit is still seen as too accessible
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- Figure 51: Agreement with statement ‘It's too easy to get hold of credit and borrow money’, by current financial situation, May 2012
Assessment of Lender Responsibility
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- Key points
- Positive and negative perceptions of the credit market
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- Figure 52: Assessment of lender responsibility, by credit type, May 2012
- Overdrafts are seen as most responsible form of consumer credit
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- Figure 53: Assessment of lender responsibility, by selected types of consumer credit, May 2012
- Consumers are highly critical of the payday loan market
- However, some consumers can see the benefit of payday loans
- Credit holders are more likely to see lenders as responsible
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- Figure 54: Assessment of lender responsibility, by credit type, by ownership of credit products, May 2012
- Multiple credit holders have a mixed view of the market
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- Figure 55: Assessment of lender responsibility, by credit type, by repertoire of types of credit held, May 2012
Appendix – Credit Ownership
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- Figure 56: Most popular types of credit held, by demographics, May 2012
- Figure 57: Next most popular types of credit held, by demographics, May 2012
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- Figure 58: Other types of credit held, by demographics, May 2012
- Figure 59: Repertoire of types of credit held, by demographics, May 2012
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Appendix – Level of Outstanding Debt
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- Figure 60: Outstanding unsecured debt, by demographics, May 2012
- Figure 61: Outstanding secured credit, by demographics, May 2012
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Appendix – Credit and the Economic Downturn
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- Figure 62: Agreement with the statements ‘It has had no impact on the way I manage my money’ and ‘I spend money more carefully than I used to’, by demographics, May 2012
- Figure 63: Agreement with the statements ‘I keep a closer eye on my finances in general’ and ‘I try not to borrow money or use credit’, by demographics, May 2012
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- Figure 64: Impact of the economic downturn on attitudes towards debt and credit, by demographics, May 2012
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Appendix – Attitudes Towards Personal Debt
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- Figure 65: Agreement with the statements ‘I feel comfortable with the amount of debt that I have’ and ‘I have concerns about my level of debt’, by demographics, May 2012
- Figure 66: Agreement with the statements ‘I try to not think about my debts’ and ‘I use credit in a responsible way’, by demographics, May 2012
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- Figure 67: Agreement with the statement ‘I focus more on how much I’m repaying each month, rather than on the total amount I owe’, by demographics, May 2012
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Appendix – General Attitudes Towards Debt and Credit
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- Figure 68: Most popular general attitudes towards debt and credit (any agree), by demographics, May 2012
- Figure 69: Next most popular general attitudes towards debt and credit (any agree), by demographics, May 2012
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Appendix – Assessment of Lender Responsibility
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- Figure 70: Assessment of mortgage lender responsibility, by demographics, May 2012
- Figure 71: Assessment of credit card provider responsibility, by demographics, May 2012
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- Figure 72: Assessment of store card provider responsibility, by demographics, May 2012
- Figure 73: Assessment of payday loan provider responsibility, by demographics, May 2012
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- Figure 74: Assessment of overdraft provider responsibility, by demographics, May 2012
- Figure 75: Assessment of unsecured personal loan provider responsibility, by demographics, May 2012
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- Figure 76: Assessment of student loan responsibility, by demographics, May 2012
- Figure 77: Assessment of homeowner/secured loan provider responsibility, by demographics, May 2012
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- Figure 78: Assessment of door-to-door loan provider responsibility, by demographics, May 2012
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