2021
9
UK Consumer Attitudes towards Debt and Credit Market Report 2021
2021-11-06T03:10:35+00:00
OX1050051
2195
144323
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Report
en_GB
“Consumer credit will return to growth in 2021 and will be sustained by pent-up demand in the next couple of years as consumers take the opportunity to make up for…

UK Consumer Attitudes towards Debt and Credit Market Report 2021

£ 2,195 (Excl.Tax)

Description

Providing the most comprehensive and up-to-date information and analysis of the UK Debt and Credit market, including the behaviours, preferences and habits of the consumer.

Consumers have a nuanced relationship with credit and attitude towards personal debt. While debt is widespread, and 82% of people trust themselves to borrow responsibility, just 38% think most people can be trusted to do the same. This reflects the continuing belief among at least some consumers that debt is an inherently problematic thing.

COVID-19 has had variable impacts on the consumer credit market. Reduced spending opportunities and lower demand for big-ticket items caused lending to fall overall – with structured lending products such as personal loans particularly hard hit. However, consumers who have suffered financial harm from the pandemic are more likely to have relied on revolving credit such as credit cards and overdrafts.

Looking ahead, savings pose an increased threat to demand for credit. Just 29% of consumers would rather pay for expensive purchases with credit than wait to save up for them, and 5% of savers have seen their savings increase since the start of the COVID-19 outbreak. The boost to household savings deposits – particularly among more well-off consumers – provides a large sum of money to fund consumer spending over credit.

Despite this, the recovery from the pandemic also presents opportunities for lenders, as consumers are keen to return to spending, including on big-ticket items they have missed out on during the outbreak. There are also opportunities to better engage with specific groups, such as young women, who show lower levels of confidence around borrowing.

Read on to discover more details or take a look at all of our UK Financial market research.

Quickly understand

  • The impact of COVID-19 on lending markets and attitudes towards debt and credit.
  • The size of secured and unsecured lending markets.
  • Analysis of the cost of borrowing and the level of bad debt, including write-offs and debt relief orders.
  • Ownership of debt products, including the value of credit held and the length of time spent in debt.
  • Borrowers’ comfort with their outstanding debts and experience of discussing debt management.
  • The relationship between savings and debt, and consumer attitudes towards credit use.

Covered in this report

Brands: Nationwide, Barclaycard, Capital One, American Express, NewDat, Halifax, Santander, Ocean Finance, Barclays Bank, Habito, Vanquis, Everday Loans, Gain Credit.

Expert analysis from a specialist in the field

This report, written by Rich Shepherd, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Consumer credit will return to growth in 2021 and will be sustained by pent-up demand in the next couple of years as consumers take the opportunity to make up for cancelled and delayed plans. However, while many households have managed to improve their finances during the pandemic, some of those who have struggled during the outbreak have relied on credit to get by. Assisting these vulnerable borrowers will be a strong focus for regulators and lenders alike during the COVID recovery.

Rich Shepherd
Category Director – B2B, Social and Economic Research

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: market context
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on debt and credit
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on debt, 2020-25
    • The market
    • Consumer credit lending fell by a fifth in 2020…
      • Figure 2: Gross consumer credit lending (excluding student loans), 2016-21
    • …while the Stamp Duty holiday prevented a similar drop in secured lending
      • Figure 3: Gross mortgage lending, 2016-21
    • Total unsecured debt has fallen
      • Figure 4: Monthly amounts outstanding of total Sterling net unsecured lending to individuals (excluding student loans), 2011-21
    • New rules and increased focus bolster protections for vulnerable borrowers
    • The consumer
    • Two thirds hold some form of debt
      • Figure 5: Types of credit owned, 2021
    • A fifth owe more than £10,000 in unsecured debt
      • Figure 6: Value of unsecured debt (excluding student loans) held, by generation, 2021
    • Just over a quarter have discussed debt management…
      • Figure 7: Experience of speaking to somebody about managing debts, 2021
    • …while those who have are most likely to have spoken to family and friends
      • Figure 8: Sources of help sought about debt management, 2021
    • Three in 10 borrowers think they will always be in debt
      • Figure 9: Attitudes towards saving and debt, 2021
    • Consumers trust themselves to borrow responsibly much more than others
      • Figure 10: Attitudes towards debt and credit, 2021
  3. Issues and Insights

    • Debts have fallen during the pandemic, but not across the board
    • Many expect to be in perpetual debt, impacting saving priorities
    • Credit use is widely accepted but still seen as problematic
  4. Unsecured Debt – Market Context

    • Consumer credit lending fell by a fifth in 2020
      • Figure 11: Gross consumer credit lending (excluding student loans), 2016-21
    • Lockdowns produced record debt repayments…
      • Figure 12: Monthly consumer credit net lending (excluding student loans), 2011-21
    • …resulting in a £28.2 billion fall in outstanding unsecured debts
      • Figure 13: Monthly amounts outstanding of total Sterling net unsecured lending to individuals (excluding student loans), 2011-21
  5. Secured Debt – Market Context

    • Mortgage lending fell by 10% in 2020 but is set for an immediate rebound
      • Figure 14: Gross mortgage lending, 2016-21
    • Stamp Duty relief prompted record demand
      • Figure 15: Monthly gross mortgage lending, by purpose, 2018-21
  6. Cost of Debt

    • Unsecured lending rates have been broadly stable over the last year
      • Figure 16: UK interest rates on unsecured credit products, 2016-21
    • Mortgage rates rose as COVID-19 hit…
      • Figure 17: Quoted household mortgage rates, 2016-21
    • …particularly for first-time buyers
      • Figure 18: Average cost of 2-year fixed-rate mortgages, by LTV ratio, 2016-21
    • Elevated inflation raises the prospect of interest rate rise
      • Figure 19: CPIH, annual percentage change, 2011-21
  7. Write-offs, Bankruptcies and Insolvencies

    • Debt write-offs fell in line with new lending in 2020
      • Figure 20: Value of write-offs to individuals, 2011-20
    • Bankruptcies, insolvencies and IVAs were broadly stable
      • Figure 21: Number of individual insolvencies, 2011-20
  8. Market Drivers

    • Savings activity exploded during lockdowns
      • Figure 22: Value of monthly net changes to household savings deposits, and total value of household savings deposits, 2011-21
    • The furlough scheme propped up household incomes for millions…
      • Figure 23: Daily number of jobs furloughed using the CJRS, 2020-21
    • …and averted a sharp rise in unemployment
      • Figure 24: Quarterly unemployment rate, UK, 2011-21
    • Most consumers have stayed positive throughout the pandemic
      • Figure 25: Current financial wellbeing index, and consumer confidence index, 2016-21
  9. Regulatory and Legislative Changes

    • Payment holidays come to an end
    • FCA launches review into change and innovation in unsecured credit
    • Government initiatives kick-start the mortgage market
    • New insolvency rules introduced to help those with problem debt
  10. Advertising and Marketing Activity

    • Above-the-line adspend fell by 35% in the year to end of August 2021
      • Figure 26: Total above-the-line, online display and direct mail advertising expenditure on credit and loan products, 2016/17-2020/21
    • Nationwide was the top advertiser in 2020/21
      • Figure 27: Top advertisers of above-the-line, online display and direct mail advertising of credit and loan products, 2020/21
    • Nielsen Ad Intel coverage
  11. Types of Credit Held

    • Two thirds hold some form of debt
      • Figure 28: Types of credit owned, 2021
    • Rise of instant digital credit is driven by younger consumers
      • Figure 29: Ownership of outstanding instant digital credit, by age, 2021
    • Overall overdraft use is stable but experiences vary
      • Figure 30: Ownership of outstanding overdraft debt, by current financial wellbeing, 2021
    • Revolving credit can introduce consumers to more considered products
      • Figure 31: Types of unsecured credit owned, by number of unsecured credit products* money is owed on, 2021
  12. Value of Unsecured Credit

    • A fifth owe more than £10,000 in unsecured debt
      • Figure 32: Value of unsecured debt (excluding student loans) held, by generation, 2021
    • Borrowers who spread their debt around are likely to owe more overall
      • Figure 33: Value of unsecured debt (excluding student loans) held, by number of unsecured credit products held, 2021
    • Higher borrowing correlates with higher savings
      • Figure 34: Value of unsecured debt (excluding student loans) held, by value of savings and investments, 2021
  13. Time in Debt with Revolving Credit

    • Up to a quarter of borrowers could be in persistent debt
      • Figure 35: Length of time in debt with revolving credit products, 2021
  14. Debt Management

    • Just over a quarter have discussed debt management…
      • Figure 36: Experience of speaking to somebody about managing debts, 2021
    • …rising to half of those with more than £10,000 outstanding
      • Figure 37: Experience of speaking to somebody about managing debts, by value of outstanding unsecured debt (excluding student loans) held, 2021
    • Debtors most likely to turn to family and friends for debt advice
      • Figure 38: Sources of help sought about debt management, 2021
    • Almost half with debts greater than £5,000 have spoken to a debt charity
      • Figure 39: Sources of help sought about debt management, by value of outstanding unsecured debt (excluding student loans) held, 2021
  15. Comfort with Level of Debt

    • Most feel comfortable with their indebtedness…
      • Figure 40: Comfort with current level of outstanding debt, 2021
    • …but a significant minority harbour concerns
      • Figure 41: Comfort with current level of outstanding debt, by value of outstanding unsecured debt and number of unsecured credit products (excluding student loans) held, 2021
    • Women are less comfortable with their debts
      • Figure 42: Comfort with current level of outstanding debt, by gender, 2021
  16. Savings and Debt

    • Most would rather wait than get big-ticket items quick on credit…
      • Figure 43: Attitudes towards saving and debt, 2021
    • …but consumers are split on prioritising savings or debt
      • Figure 44: Whether consumers would rather build up savings than clear debts, by value of unsecured debt (excluding student loans), 2021
    • A generational divide and widening inequality
      • Figure 45: Change in savings and debts since the start of the COVID-19 outbreak, by age and financial wellbeing, 2021
  17. Attitudes towards Credit Use

    • Consumers trust themselves to borrow responsibly much more than others
      • Figure 46: Attitudes towards credit use and management, 2021
    • Credit scores are about more than preparing for applications
      • Figure 47: Regular credit monitoring, by age, 2021
  18. Attitudes towards Credit Applications and Lenders

    • Room for improvement in perceptions of lenders
      • Figure 48: Attitudes towards credit applications and lenders, 2021
    • Disagreement over lending prospects undermines confidence in understanding
  19. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology

About the report

This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

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