1. Market Research
  2. > Financial Services
  3. > Banking
  4. > Bank Lending Market Trends
  5. > UK Consumer Credit Forecasts

UK Consumer Credit Forecasts

  • October 2013
  • -
  • Apex Insight
  • -
  • 23 pages

This report reviews the demand for, and supply of, consumer credit in the UK. It contains:
- An overview of the UK consumer credit market highlighting its key features and drawing relevant comparisons with other countries.
- Historical information on unsecured and secured lending trends by type.
- A detailed analysis of the economic factors which drive lending supply and demand.
- Our forecast for unsecured credit to 2017, supported by evidence and an analysis of key risks and uncertainties.

Who is it useful for?

Consumer credit providers including mainstream banks and credit card issuers as well as alternative lenders
Investors in those businesses
Advisors including consulting firms, investment banks, lawyers and accountants
Industry regulators and policymakers

What are the sources and methodology?

This report is based on:
– Analysis of a wide range of macroeconomic data from multiple sources including ONS, OBR, Bank of England, British Bankers Association, EU and OECD
– Insights from our recent work and published reports covering a range of UK consumer credit market segments
– Our UK consumer credit forecast model

Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions

Report Highlights

UK Consumer Credit Forecast and Outlook

We expect to see modest growth in unsecured consumer credit over the next few years at a rate below that experienced from 2006-08.
In particular, growth in lending will be encouraged by:
– Strengthening of the recovery in GDP
– Modest wage growth below the rate of inflation increasing the need for credit on the part of consumers who are creditworthy but see costs rising faster than incomes.
– Increase in the numbers of people who are in work and who are therefore likely to be in a position to borrow from mainstream sources.
– Significant improvements in consumer confidence supporting increased retail sales spending and further growth in larger purchases such as new cars and home improvements.

Attitude of mainstream lenders

We believe that most lenders will continue to be relatively cautious in their approach and that interest rates on consumer credit will therefore remain high relative to base rates for the next couple of years. Nevertheless, the Bank of England Credit Conditions Survey findings do support some increase in the level of lending.

A critical point will be when the Bank of England decides to increase interest rates. It has signalled that this will come when unemployment falls to 7.0%, which it expects to happen in 2016 – although market expectations appear to be for an earlier rise, in 2015. When this happens, lenders may decide that, rather than increasing their rates in parallel, they believe the recovery is strong enough to allow a more liberal approach.

Housing market uncertainty

The housing market presents some specific uncertainty with many economists and property professionals believing that the government’s Help-to-Buy scheme will cause it to overheat in the short term. This may stimulate activity and demand for credit by improving consumer confidence but, if it does, this will increase the risk of a correction if a change of policy follows the 2015 election. Another possible impact of a rise in house prices is a return to widespread use of equity release, rather than unsecured credit, to fund consumer spending. Our forecast assumes that there is not a significant spike in house prices arising from this policy but note it as a risk.
Alternative lenders

Market conditions and mainstream lender interest rate policies are likely to continue to be favourable for alternative lenders, such as peer-to-peer lending platforms and high-cost credit providers like payday loans companies. We believe that the market opportunity for these lenders largely arises from the current conservative approach of the mainstream lenders. Alternative lenders are exploiting the market opportunity by innovating their business models and bringing out new products to better target customer segments which they see as not well served. However, for the next couple of years at least, these sources will remain a small proportion of overall lending hence will have only a limited impact on the market as a whole. In the longer term, they may lead to changes in the market which help to address some of the supply limitations arising from the UK’s relatively homogenous and concentrated banking sector.

Table Of Contents

UK Consumer Credit Forecasts
About this report
UK consumer credit overview
International comparisons
Property transactions and secured lending
Unsecured lending trends
Other indicators: retail sales and new car purchases
Labour market outlook
Consumer confidence
Lenders' views
Unsecured consumer credit forecast

View This Report »

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 24 Million searchable statistics with tables, figures & datasets
  • More than 10,000 trusted sources
24/7 Customer Support

Talk to Veronica

+1 718 514 2762

Purchase Reports From Reputable Market Research Publishers
IDC PeerScape: Consumer Loan Origination -- Practices to Ensure a Successful Loan Origination Replacement

IDC PeerScape: Consumer Loan Origination -- Practices to Ensure a Successful Loan Origination Replacement

  • $ 4 500
  • Industry report
  • July 2016
  • by IDC

This IDC study introduces five practices that can help business and technology executives leverage their investment to either replace or upgrade existing consumer loan origination platforms. IDC Financial ...

Global Automotive Financing Market - Analysis Of Growth, Trends Progress and Challenges (2015 - 2020)

Global Automotive Financing Market - Analysis Of Growth, Trends Progress and Challenges (2015 - 2020)

  • $ 4 250
  • Industry report
  • August 2016
  • by Mordor Intelligence LLP

The Global Automotive Financing Market is expected to grow at a CAGR of 12.08% and grow to a market size of $ X.XX billion by the year 2020. Most of the developed countries have still not reached the pre-recession ...

Retail Banking Country Snapshot: Australia 2016

Retail Banking Country Snapshot: Australia 2016

  • $ 3 450
  • Industry report
  • October 2016
  • by Verdict Financial

Summary The Australian financial services market is highly developed, although it is largely dominated by its big four - Commonwealth Bank (CBA), NAB, Westpac, and ANZ, which each own a number of othe ...

Consumer Lending In Argentina

October 2016 $ 2 077

Consumer Lending In Norway

October 2016 $ 2 077

Consumer Lending In Italy

October 2016 $ 2 077

Consumer Lending In Morocco

October 2016 $ 2 077

Consumer Lending In Mexico

October 2016 $ 2 077


Reportlinker.com © Copyright 2016. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.