What you need to know

Unsecured debt had been rising for five years from early 2013 until mid-2018. More recently, between November 2018 and April 2019, it has stalled with no growth in total outstanding unsecured credit.

Household finances should be looking positive, with wage growth outstripping inflation and historically low levels of unemployment. However, political and economic uncertainty alongside the threat of rising interest rates has made people think twice about committing to major new purchases that are likely to be financed with credit. The number of housing transactions has fallen in each of the last two years while car sales have also slowed sharply.

Research for this Report shows that more borrowers are more optimistic about clearing their debts than they were in 2018, despite fewer people reducing the amount they owe in the past two years. This makes for a challenging market for lenders, but there remain significant opportunities for those that can offer products that are fast, clear, flexible, and make the borrower feel like they are in control.

Products covered in this Report

This Report examines both secured and unsecured lending, although unsecured debt is the focus for the majority of the consumer research. 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 products 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.

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