Ireland Loans and Alternate Sources of Credit Market Report 2021
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Description
“Although the years leading up to the COVID-19 outbreak were characterised by steady growth in value and volume of loans and other credit products held by Irish consumers, the sudden reversal brought about by the COVID-19 outbreak was almost certainly a momentary interruption rather than a cessation or reversal of this trend.”
– Brian O’Connor, Senior Consumer Analyst
This Report looks at the following areas:
- The impact of COVID-19 on consumer behaviour regarding loans and other forms of credit.
- The types of loans and other credit products owned and used by Irish consumers.
- The time and period when consumers took out their most recent loans, in addition to the value of these loans.
- Whether or not consumers intend applying for new loans in the coming 12 months.
- Consumers’ attitudes and behaviour when it comes to researching, arranging and managing loans.
Table of Contents
-
Overview
- What you need to know
- Key issues covered in this Report
- Issues covered in this Report
- COVID-19: market context
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Executive Summary
- The impact of COVID-19 on loans and other forms of credit
- Figure 1: Short, medium and long-term impact of COVID-19 on loans and other forms of credit, January 2021
- The market
- Decline in value of outstanding credit 2020
- Figure 2: Outstanding credit advanced to households (excluding loans for home purchase), actual, estimated, forecast and projected, IoI, RoI and NI, 2016-25
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- Figure 3: Indexed estimated, forecast and projected outstanding credit advanced to households (excluding loans for home purchase), RoI and NI, 2015-25
- Market drivers
- Both NI and RoI economies expected to return to growth in 2021
- Most consumers positive and confident about financial situation
- COVID-19 outbreak putting pressure on consumers’ finances
- The consumer
- Only 37% do not owe anything on any loan or credit product
- Figure 4: Types of loans and credit products that consumers currently owe money on (excluding mortgages), NI and RoI, November 2020
- Relatively few loans taken out during COVID-19 pandemic
- Figure 5: When consumers took out their last loan, NI and RoI, November 2020
- Most borrowers owe an amount less than £5,000 (€5,600)
- Figure 6: How much consumers owe on their loans and credit products, NI and RoI, November 2020
- Most consumers say they are unlikely to apply for a loan in next year
- Figure 7: How likely or unlikely consumers are to apply for a new personal loan (eg from a bank) in the next 12 months, NI and RoI, November 2020
- COVID-19 causing reluctance and wariness among would-be borrowers
- Figure 8: Agreement with selected statements pertaining to COVID-19 and lending, NI and RoI, November 2020
- Majority of consumers check prices before committing to a loan
- Figure 9: Agreement with selected statements about researching, arranging and managing loans, NI and RoI, November 2020
- What we think
- The impact of COVID-19 on loans and other forms of credit
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The Market – Key Takeaways
- Irish consumers have just under €20 in loans
- Both NI and RoI economies expected to return to growth in 2021
- Most consumers positive and confident about financial situation
- COVID-19 outbreak putting pressure on consumers’ finances
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Market Size and Forecast
- Short, medium and long-term impact on the industry
- Figure 10: Short, medium and long-term impact of COVID-19 on loans and other forms of credit, January 2021
- Value of outstanding credit down almost €2 billion in 2020
- Figure 11: Outstanding credit advanced to households (excluding loans for home purchase), actual, estimated, forecast and projected, IoI, RoI and NI, 2016-25
- Steady growth for both markets anticipated for coming five years
- Figure 12: Indexed estimated, forecast and projected outstanding credit advanced to households (excluding loans for home purchase), RoI and NI, 2021-25
- Short, medium and long-term impact on the industry
-
Market Drivers
- Both Irish economies expected to recover well in 2021
- RoI economy to contract 4% in 2020, and partly recovering in 2021
- Most consumers describe finances as either ‘healthy’ or ‘OK’
- Figure 13: Consumers’ own assessment of their financial situation, NI and RoI, November 2020
- Around a third of consumers expect financial situation to get better
- Figure 14: Consumers’ assessment of how their own financial situation will likely change over the coming 12 months, NI and RoI, November 2020
- Risk of COVID-19 weighing heavily on consumers’ minds
- Figure 15: How worried consumers are about the risk of being exposed to the coronavirus (also known as COVID-19), NI and RoI, January 2021
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- Figure 16: How worried consumers are about how the COVID-19 outbreak might affect their lifestyle, NI and RoI, January 2021
- COVID-19 outbreak exerting pressure on consumers’ finances
- Figure 17: How consumers’ financial situation has changed since the start of the COVID-19 outbreak in their country, NI and RoI, September 2020
- One in 12 Irish consumers has applied for a loan payment holiday
- Figure 18: Consumer agreement with statement, ‘I’ve applied for a payment holiday on a mortgage/loan/credit card’, IoI, NI and RoI, January 2021
- Figure 19: Consumer agreement with statement, ‘I’ve applied for a payment holiday on a mortgage/loan/credit card’, by age and social class, Ireland, January 2021
- 20% struggling to make ends meet due to furloughing and job losses
- Figure 20: Consumer agreement with statement, ‘Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?’, IoI, NI and RoI, January 2021
- Significant minority have altered spending behaviour
- Figure 21: Consumer agreement with statement, ‘Since the start of the COVID-19/coronavirus outbreak, which of the following apply to you?’, IoI, NI and RoI, January 2021
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Companies and Innovations – Key Takeaways
- Quick access to loans
- Addressing the gender gap
- Loans for environmental activities
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Who’s Innovating?
- Instant loans available in France
- Women first lending
- Green loans could play well with eco-minded borrowers
- Figure 22: Environmental and ethical issues most important to consumers, NI and RoI, November 2018
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Company Profiles
- Banks
- Allied Irish Bank
- Key facts
- Product portfolio
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- Figure 23: AIB Credit Card portfolio with interest rates and APR’s, RoI, 2020
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- Figure 24: AIB Credit card portfolio with features, NI, 2020
- Recent developments
- Bank of Ireland
- Key facts
- Product portfolio
- Figure 25: Bank of Ireland personal loan amounts with features, RoI, 2020
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- Figure 26: Bank of Ireland credit card portfolio, with features, RoI, 2020
- Recent developments
- Danske Bank
- Key facts
- Product portfolio
- Recent developments
- First Direct (NI only)
- Key facts
- Product portfolio
- Figure 27: First Direct loan amounts with APRs, NI, 2020
- Recent developments
- KBC Ireland (RoI only)
- Key facts
- Product portfolio
- Figure 28: KBC Bank loan amount and rates, Ireland, 2020
- Recent developments
- Nationwide (NI only)
- Key facts
- Product portfolio
- Figure 29: Nationwide loans and rates, NI, 2020
- Recent developments
- Permanent TSB (RoI only)
- Key facts
- Product portfolio
- Figure 30: Permanent TSB loan amounts and rates, RoI, 2020
- Figure 31: Permanent TSB home improvement loan amounts and rates, RoI, 2020
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- Figure 32: Permanent TSB cash secured loans and rates, RoI, 2020
- Recent developments
- Santander (NI only)
- Key facts
- Product portfolio
- Figure 33: Santander loan amounts and rates, NI, 2020
- Recent developments
- Credit unions
- Dubco
- Key facts
- Product portfolio
- Figure 34: Dubco loan types and rates, RoI, 2020
- Recent developments
- Irish League of Credit Unions
- Key facts
- Product portfolio
- Recent developments
- Life Credit Union (RoI only)
- Key facts
- Product portfolio
- Figure 35: Life Credit Union loan’s and rates, Roi, 2020
- Recent developments
- Payday loan providers
- 118 118 Money (NI only)
- Key facts
- Product portfolio
- Peachy
- Key facts
- Product portfolio
- Recent developments
- Personal loan providers
- Amigo loans (NI only)
- Key facts
- Product portfolio
- Recent developments
- Avantcard (RoI only)
- Key facts
- Product portfolio
- Figure 36: Avantcard loan amounts and rates, RoI, 2020
- Recent developments
- Chill Money (RoI only)
- Key facts
- Product portfolio
- Figure 37: Chill Money personal loan amounts and rates, RoI, 2O20
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The Consumer – Key Takeaways
- Only 37% do not owe anything on any loan or credit product
- Relatively few loans taken out during COVID-19 pandemic
- Most borrowers owe an amount less than £5,000 (€5,600)
- Most consumers say they are unlikely to apply for a loan in next year
- COVID-19 causing reluctance and wariness among would-be borrowers
- Majority of consumers check prices before committing to a loan
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Types of Loans and Credit Held
- Almost two thirds of all consumers owe on a loan or credit product
- Figure 38: Types of loans and credit products that consumers currently owe money on (excluding mortgages), NI and RoI, November 2020
- 25-54s most inclined to be burdened with debt
- Figure 39: Consumers who currently do not owe money on any loan or credit product, by age, NI and RoI, November 2020
- Strong correlation between children in the household and likelihood to be in debt
- Figure 40: Consumers who currently do not owe money on any loan or credit product, by presence of children in household, NI and RoI, November 2020
- Credit card debt broadly consistent across consumers aged 25+
- Figure 41: Consumers who currently owe money on a credit card, by age and financial situation, NI and RoI, November 2020
- Car loans, personal loans and credit union loans have different appeal
- Figure 42: Consumers who currently owe money on a car loan/car finance plan, by age and social class, NI and RoI, November 2020
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- Figure 43: Consumers who currently owe money on a personal loan, by age and social class, NI and RoI, November 2020
- Figure 44: Consumers who currently owe money on a credit union loan, by age and social class, NI and RoI, November 2020
- ABC1s and 25-54s owe money on current account overdrafts
- Figure 45: Consumers who currently owe money on a current account overdraft, by age and social class, NI and RoI, November 2020
- Almost two thirds of all consumers owe on a loan or credit product
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When Last Loan Taken Out
- Only one in seven took out loan in the last six months
- Figure 46: When consumers took out their last loan, NI and RoI, November 2020
- Data suggests extent of COVID-19 impact on borrowing by consumers
- Only one in seven took out loan in the last six months
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Value of Consumers’ Loans
- Around two thirds of borrowers owe less than £5,000 (€5,600)
- Figure 47: How much consumers owe on their loans and credit products, NI and RoI, November 2020
- Tendency to owe small amounts spread equally across demographics
- Figure 48: Consumers who owe less than £500/€600 on their loans and credit products, by age and social class, NI and RoI, November 2020
- ABC1s and high-earners most likely to owe larger amounts
- Around two thirds of borrowers owe less than £5,000 (€5,600)
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Future Loan Application Intentions
- Majority of consumers unlikely to apply for a loan in next year
- Figure 49: How likely or unlikely consumers are to apply for a new personal loan (eg from a bank) in the next 12 months, NI and RoI, November 2020
- Women, older consumers most inclined to say very unlikely will apply
- Figure 50: Consumers who say they are very unlikely to apply for a new personal loan (eg from a bank) in the next 12 months, by gender and age, NI and RoI, November 2020
- Income a major factor in tendency to think loan application very unlikely
- Figure 51: Consumers who say they are very unlikely to apply for a new personal loan (eg from a bank) in the next 12 months, by social class and annual household income, NI and RoI, November 2020
- Confidence in ability to repay another factor when assessing likelihood of borrowing
- Figure 52: Consumers who say they are very unlikely to apply for a new personal loan (eg from a bank) in the next 12 months, by expectation of how financial situation will change over the coming 12 months, NI and RoI, November 2020
- Men, 18-44s and high earners most likely to apply for loan
- Majority of consumers unlikely to apply for a loan in next year
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The Impact of COVID-19 on Loans and Borrowing
- Majority of consumers more reluctant to borrow due to COVID-19
- Figure 53: Agreement with selected statements pertaining to COVID-19 and lending, NI and RoI, November 2020
- COVID-19-induced wariness evenly spread across all demographics
- Figure 54: Agreement with statement ‘COVID-19/coronavirus would make me wary about taking out any new loans/debts’, by gender, social class and age, NI and RoI, November 2020
- Younger consumers more in need of credit due to COVID-19
- Figure 55: Agreement with statement ‘COVID-19/coronavirus has seen my need to take out a new loan increase’, by gender and age, NI and RoI, November 2020
- ABC1 and high earners more likely to need credit due to COVID-19
- Figure 56: Agreement with statement ‘COVID-19/coronavirus has seen my need to take out a new loan increase’, by social class and annual household income, NI and RoI, November 2020
- Confidence in ability to repay loan a major factor in identifying need for credit
- Figure 57: Agreement with statement ‘COVID-19/coronavirus has seen my need to take out a new loan increase’, by expectations for how financial situation will change over next 12 months, NI and RoI, November 2020
- Men and older consumers most aware of offer of loan payment holiday
- Figure 58: Agreement with statement ‘My loan provider has offered me a payment holiday during the COVID-19/coronavirus outbreak’, by gender, social class and age, NI and RoI, November 2020
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- Figure 59: Agreement with statement ‘My loan provider has offered me a payment holiday during the COVID-19/coronavirus outbreak’, by location, NI and RoI, November 2020
- Majority of consumers more reluctant to borrow due to COVID-19
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Researching, Arranging and Managing Loans
- Most shop around before taking out a loan, but not after
- Figure 60: Agreement with selected statements about researching, arranging and managing loans, NI and RoI, November 2020
- Pre-commitment shopping around common among all demographics…
- Figure 61: Agreement with statement ‘I would use a price comparison site to help me find a new loan’, by gender, age and social class, NI and RoI, November 2020
- …but men, younger consumers and ABC1s far more likely to keep shopping around
- Figure 62: Agreement with statement ‘I regularly look to see if I could save money switching my loan’, by gender, age and social class, NI and RoI, November 2020
- Consumers largely confident of being approved for loan
- Figure 63: Agreement with statement ‘I am confident that I would be accepted for a loan’, by gender and social class, NI and RoI, November 2020
- But Brexit-related doubts persist, dampening enthusiasm for added debt
- Figure 64: Agreement with statement ‘Brexit uncertainty means that now is a bad time to take out a loan’, by expectation of how financial situation will change over coming 12 months, NI and RoI, November 2020
- Current account providers in strong, but not unassailable, position
- Figure 65: Agreement with statement ‘I would be more likely to use a loan provider that offers additional benefits (eg shopping vouchers, car breakdown cover, etc) than one that doesn’t’, by gender, age and social class, NI and RoI, November 2020
- Likely loan acceptance valued over rates by significant minority
- Figure 66: Agreement with statement ‘Whether I’m likely to be accepted for a loan is more important to me than the interest rate’, by gender, age and social class, NI and RoI, November 2020
- Most shop around before taking out a loan, but not after
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Appendix – Data Sources, Abbreviations and Supporting Information
- Data sources
- Generational cohort definitions
- Abbreviations
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