Table of Contents
Overview
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- What you need to know
- Products covered in this report
Executive Summary
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- The market
- Borrowers continue to benefit from low rate environment
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- Figure 1: UK interest rates, January 2011-April 2018
- Financial well-being holding up well
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- Figure 2: The financial well-being index, January 2015-May 2018
- Value of lending continues to rise
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- Figure 3: Value of unsecured lending and annual growth rate, 2008-17
- Value of mortgage lending rises by 4%
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- Figure 4: Gross mortgage lending, not seasonally adjusted, 2012-17
- Falling value of write-offs indicates improved industry practice
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- Figure 5: Value of write-offs for individuals, not seasonally adjusted, 2012-17
- The consumer
- Two in three have some form of debt
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- Figure 6: Credit product ownership, April 2018
- One in three owe less than £1,000
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- Figure 7: Value of outstanding unsecured debt, April 2018
- Over half haven’t reduced their debt in the last two years
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- Figure 8: Debt situation over the last two years, April 2018
- Borrowers are optimistic about reducing their debt
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- Figure 9: Expected debt situation in the next two years, April 2018
- Two in three shop around for credit
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- Figure 10: Attitudes towards arranging new credit products, April 2018
- Borrowers weigh up trust and cost when selecting a provider
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- Figure 11: Important factors when choosing a credit provider, April 2018
- Significant interest in fintech-based lending innovation
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- Figure 12: Interest in new credit management products and services, April 2018
- What we think
Issues and Insights
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- Credit management innovations will appeal to the anxious borrower
- The facts
- The implications
- Interest rate concerns see a significant fall in appetite for credit
- The facts
- The implications
- Open Banking will give newer players more of an edge
- The facts
- The implications
The Market – What You Need to Know
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- Borrowers continue to benefit from low rate environment
- Financial well-being index holds up well
- Value of lending continues to rise
- Value of mortgage lending rises by 4%
- Falling value of write-offs indicates improved industry practice
Economic Outlook
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- GDP growth continues its downward trend
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- Figure 13: Gross domestic product, quarterly change (seasonally adjusted), Q1 2012-Q1 2018
- Inflation exceeds earnings growth throughout 2017
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- Figure 14: Inflation, Bank of England base rate and Average Weekly Earnings growth, January 2010-March 2018
- Unemployment falls to four-decade low
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- Figure 15: UK unemployment rate, Q1 2007-Q1 2018
- Borrowers continue to benefit from low rates environment
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- Figure 16: UK interest rates, January 2011-April 2018
Consumer Financial Well-being
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- Financial well-being index holds strong
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- Figure 17: The financial well-being index, January 2015-May 2018
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- Figure 18: Current financial situation, May 2018
- Financial situation has worsened over the last year
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- Figure 19: Changes in household finances, January 2015-May 2018
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- Figure 20: Changes in household finances, May 2018
- Financial confidence recovered at the start of 2018
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- Figure 21: The financial confidence index, January 2015-May 2018
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- Figure 22: Consumer sentiment for the coming year, May 2018
Consumer Credit Lending
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- Value of lending continues to rise
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- Figure 23: Value of unsecured lending and annual growth rate, 2008-17
- Amount outstanding continues to rise
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- Figure 24: Amounts outstanding of total (excluding the Student Loans Company) unsecured lending to individuals, not seasonally adjusted, January 2008-March 2018
- Credit cards account for majority of unsecured lending
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- Figure 25: Consumer credit lending (excluding student loans), 2011-17
- FCA publishes update on high-cost credit
Mortgage Market Lending
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- Value of mortgage lending rises by 4%
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- Figure 26: Gross mortgage lending, not seasonally adjusted, 2012-17
- House purchase approvals stall
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- Figure 27: Annual number of mortgage approvals, by purpose, not seasonally adjusted, 2010-17
Write-offs, Repossessions and Insolvencies
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- Falling value of write-offs indicates improved industry practice
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- Figure 28: Value of write-offs for individuals, not seasonally adjusted, 2012-17
- Mortgage arrears and repossessions remain low
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- Figure 29: Quarterly mortgage arrears (at least 2.5%) and repossessions, Q1 2013-Q1 2018
- Insolvencies rise for second year
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- Figure 30: Individual insolvencies in England and Wales, by type, not seasonally adjusted, 2013-17
The Consumer – What You Need to Know
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- Two in three have some form of debt
- One in three owe less than £1,000
- Over half haven’t reduced their debt in the last two years
- Two in three shop around for credit
- Borrowers weigh up trust and cost when selecting a provider
- Two in three interested in one or more innovations
Credit Product Ownership
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- Two in three have some form of debt
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- Figure 31: Credit product ownership, April 2018
- Multiple credit users stand to benefit from account aggregators
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- Figure 32: Number of credit products currently owing money on, by household income, April 2018
Value of Outstanding Unsecured Debt
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- One in three owe less than £1,000
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- Figure 33: Value of outstanding unsecured debt, April 2018
- Debt falls with age
- Retirement debt is a growing concern
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- Figure 34: Value of outstanding unsecured debt, by age, April 2018
Debt Situation over the Last Two Years
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- Over half haven’t reduced their debt in the last two years
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- Figure 35: Debt situation over the last two years, April 2018
- Lower value borrowers more likely to have kept their debt the same
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- Figure 36: Debt situation over the last two years, by value of unsecured debt, April 2018
- Initial credit relationships are important
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- Figure 37: Debt situation over the last two years, April 2018
Expected Debt Situation in the Next Two Years
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- Borrowers are optimistic about reducing their debt
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- Figure 38: Expected debt situation in the next two years, April 2018
Arranging Credit Products
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- Two in three shop around for credit
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- Figure 39: Attitudes towards arranging new credit products, April 2018
- Credit score awareness will improve application confidence
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- Figure 40: Agreement with “Concerns about being rejected put me off applying for credit”, April 2018
- Overdraft users disadvantaged by prioritising current account rewards
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- Figure 41: Attitudes towards arranging new credit products, by ownership of credit products, April 2018
Attitudes towards Managing Debt
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- Two in three feel uncomfortable owing money
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- Figure 42: Attitudes towards managing debt, April 2018
- Young borrowers need clarification on the impact of rising rates
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- Figure 43: Attitudes towards managing debt, by age, April 2018
- Half need help saving and repaying debt at the same time
- Case Study: LOQBOX helps people build a credit history through saving
Important Factors When Choosing a Credit Provider
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- Borrowers weigh up trust and cost when selecting a provider
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- Figure 44: Important factors when choosing a credit provider, April 2018
- 18-34-year-olds can be enticed with added-value factors
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- Figure 45: Important factors when choosing a credit provider, April 2018
- Providers should promote the speed of application
Interest in Credit Management Innovations
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- Two in three interested in one or more innovations
- Services must feel truly personal
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- Figure 46: Interest in new credit management products and services, April 2018
- Borrowers owing over £10,000 more are most interested in automation
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- Figure 47: Interest in new credit management products and services, by value of unsecured debt, April 2018
- Frequent credit users more interested in credit management services
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- Figure 48: Interest in new credit management products and services, by number of credit products held, April 2018
- Case Study: Automated tools make meeting financial goals effortless
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
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