Consumer credit and mortgage lending have experienced a period of impressive growth in 2013/14. Banks, assisted by government and central bank schemes, became more relaxed about lending, and consumers’ increasing confidence made them more open to the idea of borrowing. Despite this, appetite for obtaining credit in the next year remains limited.

Consumers are still wary of the idea of taking on debt, but the performance of credit markets shows that more people are willing to overcome this. This has been helped by improvements in economic conditions, such a reduction in unemployment and lower inflation.

This report examines consumers’ attitudes towards debt and their use of credit products. The report looks at how much debt is owed and on what types of product, as well as consumers’ appetite for borrowing in the coming year. The report also investigates how consumers feel about managing money and managing debt in particular.

Definitions

This report focuses on both secured and unsecured lending. For the purposes of the report, these two types of credit are defined as follows:

Secured lending – lending that is secured against a property, ie the ownership of the property is at risk if repayments are not made to clear the debt. This is primarily mortgages used to purchase properties, but also includes homeowner loans, where homeowners borrow additional funds secured against their home.

Unsecured lending – any type of lending that does not fit the definition of secured lending, ie Lending that is not secured against a property. This includes a wide range of consumer credit product such as credit cards, personal loans and current account overdraft facilities. Please note that this definition also includes car finance plans which can be ‘secured’ against the vehicle being purchased.

Abbreviations

AWE Average Weekly Earnings
BoE Bank of England
CPI Consumer Price Index
FCA Financial Conduct Authority
GDP Gross Domestic Product
HEW Housing Equity Withdrawal
LIBOR London Interbank Offered Rate
PPI Payment Protection Insurance
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Fieldwork methodology

This report extensively draws on Mintel’s commissioned consumer research looking at consumer attitudes towards debt and credit. The fieldwork was carried out by GMI in May 2014 among an online sample of 1,940 internet users aged 18+.

In addition to quantitative consumer research, Mintel also conducted an online discussion group among a demographically mixed group of consumers. This discussion group was asynchronous (ie not run in real time), functioning like a blog or bulletin board, with questions remaining posted for a pre-determined period of time. This method allows participants to respond reflectively, at their leisure, or to log off to think about any issues raised, and return later to respond. Participants were recruited from GMI’s online consumer panel.

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