Table of Contents
Executive Summary
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- Unsecured lending driven up by spikes in new credit
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- Figure 1: Monthly gross and net unsecured lending to individuals, excluding the Student Loans Company, January 2009-April 2015 (not seasonally adjusted)
- More than half of people have outstanding unsecured debt
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- Figure 2: Credit product ownership, by age group and credit type, May 2015
- The level of individual debt is stable
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- Figure 3: Level of outstanding debt, by gross annual household income, May 2015
- Women more likely to say they are struggling with debts than men
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- Figure 4: Proportion of people struggling with their debt repayments, by age and gender, May 2015
- 44% of debtors would consider arranging further credit if they were struggling
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- Figure 5: Proportion of those who have any debt that would consider arranging further credit if they were struggling with debt repayments, by age and gender, May 2015
- Retail banks prove popular for the future, but online sources are gathering pace
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- Figure 6: Most likely future sources of credit, May 2015
- Most debtors want credit companies to provide proactive protection
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- Figure 7: Attitudes towards credit, May 2015
- Debtors are striving to live within their means
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- Figure 8: Attitudes towards debt, May 2015
- More than half are happy to talk about their debts
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- Figure 9: Agreement with the statement ‘I am comfortable talking about how much money I owe’, by level of outstanding unsecured debt, May 2015
Issues and Insights
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- Online-only brands could challenge high street lenders
- The facts
- The implications
- People are becoming more comfortable with long-term unsecured debt
- The facts
- The implications
The Market – What You Need to Know
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- The economy is showing signs of steady recovery
- Financial wellbeing is steady, but confidence is yet to return
- Lending gets competitive in the low interest rate environment
- Mortgage lending moves up despite the Mortgage Market Review (MMR)
- More borrowers are managing to repay their debt without issue
Economic Outlook
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- GDP growth fails to lift disposable incomes…
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- Figure 10: Quarterly change in GDP, 2009 Q1-2015 Q1
- Figure 11: GDP per head at current market prices, and real household disposable income per head, 2009 Q1-2014 Q4
- …but inflation has fallen significantly
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- Figure 12: Annual percentage change in CPI and RPI measures of inflation, January 2009-April 2015
- Interest rates have stayed low…
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- Figure 13: UK interest rates, January 2009-May 2015
- …leaving people with limited incentive to save
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- Figure 14: Household savings ratio, 2009 Q1-2014 Q4
- Falling unemployment gives hope to the recovery
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- Figure 15: Total UK unemployment rate among people aged 16+, January 2009-February 2015
Consumer Financial Wellbeing
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- Financial wellbeing has stabilised for the first time since the recession
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- Figure 16: The financial wellbeing index, February 2009-February 2015
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- Figure 17: Trend in consumer financial situation, May 2015
- 28% feel better off than a year ago
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- Figure 18: The recovery index, 2011-15
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- Figure 19: Trend in consumer financial situation compared to a year ago, May 2015
- Confidence about the future has slipped during 2015
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- Figure 20: The financial confidence index, 2009-15
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- Figure 21: Trend in consumer sentiment for the coming year, May 2015
Consumer Credit Lending
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- Unsecured lending driven up by spikes in new credit …
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- Figure 22: Monthly gross and net unsecured lending to individuals, excluding the Student Loans Company, January 2009-April 2015 (not seasonally adjusted)
- …but credit card providers are coming under pressure over aggressive marketing
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- Figure 23: Yearly gross and net credit card lending to individuals, excluding the Student Loans Company, (not seasonally adjusted) 2009-14
- Non-credit card lending is becoming more common
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- Figure 24: Yearly gross and net other consumer credit lending to individuals, excluding the Student Loans Company, (not seasonally adjusted) 2009-14
Mortgage Market Lending
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- Mortgage lending climbs back towards pre-recession levels …
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- Figure 25: Total secured lending, by gross and net advances, 2009-14 (not seasonally adjusted)
- …but approvals and re-mortgages falter following the MMR
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- Figure 26: Number of quarterly mortgage approvals seasonally adjusted, by type, Q1 2009-Q1 2015
Write-offs, Repossessions and Arrears
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- Write-offs drop as creditors push for repayment…
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- Figure 27: Value of write-offs to loans to individuals, 2009-14 (not seasonally adjusted)
- …with arrears and repossessions falling
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- Figure 28: Mortgage arrears (2.5% or more of mortgage balance) and repossessions, Q1 2009-Q1 2015
- …and improving personal finances quell insolvencies
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- Figure 29: Individual insolvencies in England and Wales, by type, 2009-14 (not seasonally adjusted)
- A greater proportion of bankruptcies were initiated by creditors in 2014
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- Figure 30: Individual bankruptcies in England and Wales, by proportion of petition type, 2009-14 (not seasonally adjusted)
- Figure 31: Individual bankruptcies in England and Wales, by petition type, 2009-14 (not seasonally adjusted)
The Consumer – What You Need to Know
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- 63% of people have outstanding debt
- The level of outstanding debt people have is under control
- Women are more likely to say they are struggling with debt repayments
- Young men are the most likely to seek further credit if they were struggling with repayments
- Online options are growing in popularity as future sources of credit
- Debtors want more support to prevent financial difficulty
Credit Product Ownership
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- Over half of people have outstanding unsecured debt …
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- Figure 32: Credit product ownership, May 2015
- …and younger people are used to having unsecured debt
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- Figure 33: Credit product ownership, by age group and credit type, May 2015
- People try to limit themselves to one credit type
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- Figure 34: Credit product ownership, repertoire analysis, May 2015
Level of Outstanding Unsecured Debt
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- The extent of personal debt is under control…
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- Figure 35: Level of outstanding unsecured debt, 2012-15
- Figure 36: Level of outstanding debt, May 2015
- …but the highest earners have racked up the biggest debts
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- Figure 37: Level of outstanding debt, by gross annual household income, May 2015
Level of Comfort with Debt Repayments
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- The majority are comfortable with their debt repayments…
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- Figure 38: Level of comfort with debt repayments, May 2015
- …but women are more likely to say they are struggling
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- Figure 39: Proportion of people struggling with their debt repayments, by age and gender, May 2015
Approaches to Financial Difficulty
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- 44% of debtors would consider further credit if they were struggling …
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- Figure 40: Approaches to struggling with debt repayments, May 2015
- …and young males are at the front of the queue
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- Figure 41: Proportion of those who have any debt that would consider arranging further credit if they were struggling with debt repayments, by age and gender, May 2015
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- Figure 42: Proportion of those who have any debt that would arrange further credit if they were struggling with debt repayments, by gross annual household income, May 2015
- Younger women are more likely to seek out advice
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- Figure 43: Proportion of those who have any debt that would seek advice if they were struggling with debt repayments, by age and gender, May 2015
Future Sources of Credit
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- Online payment providers have the opportunity to rival banks …
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- Figure 44: Most likely future sources of credit, May 2015
- …if they can build an early relationship with Millennials
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- Figure 45: Proportion of people that would be most likely to use an online payment provider if they were to obtain credit in future, by generation, May 2015
Attitudes towards Credit
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- Most debtors want lenders to support them before they get into difficulty
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- Figure 46: Attitudes towards credit, May 2015
- Clear gaps in knowledge when it comes to credit ratings
- Young males show no signs of changing short-term credit habits
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- Figure 47: Agreement with the statement ‘I prefer the flexibility of short-term credit options such as payday loans and overdrafts’, by age and gender, May 2015
- Peer-to-peer lenders have the opportunity to make ethics a focus
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- Figure 48: Agreement with the statement ‘I’d consider using a peer to peer lending service (eg Zopa or Funding Circle’, by age, May 2015
Attitudes towards Debt
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- Most debtors still want to live within their means…
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- Figure 49: Attitudes towards debt, May 2015
- …and keeping repayments low is more important to older borrowers
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- Figure 50: Agreement with the statement ‘Keeping debt repayments low is the most important thing when borrowing money’, by age, May 2015
- More than half are comfortable talking about their debt – regardless of how high it is
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- Figure 51: Agreement with the statement ‘I am comfortable talking about how much money I owe’, by level of outstanding unsecured debt, May 2015
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