2022
9
UK Attitudes towards Debt and Credit Market Report 2022
2022-11-01T03:04:25+00:00
OX1102599
2195
157038
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Report
en_GB
“Consumer credit will continue growth in 2022 as the cost of living crisis drives demand for revolving credit. As the pressure on household finances increases and consumer confidence remains low,…

UK Attitudes towards Debt and Credit Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Attitudes Towards Debt and Credit Market Report identifies the shift in consumer attitudes towards secured and unsecured lending, borrowers’ experience in debt management and the impact of the cost of living on the debt and credit market. This report covers the UK lending market size, market forecast, market segmentation and trends in the UK debt and credit market.

 

Current Landscape of the UK Debt and Credit Market

Rising inflation is creating significant pressure on household finances, causing consumers’ attitudes towards debt and credit to fluctuate. As a consequence, interest rates have been increased, with the Government’s fiscal event at the end of September 2022 adding to the upward pressure on rates. The rising cost of borrowing will add to consumer anxiety, especially for those mortgage borrowers coming to the end of a deal, who are likely to see a significantly higher rates than at their last arrangement.

 

UK Lending Market and Key Industry Trends

As consumer confidence hits a new low, Mintel’s attitudes towards debt and credit research shows that 23% of UK consumers were “really worried” about their financial situation over the next year. This will undoubtedly limit borrowing and credit use over the next year among those considering more discretionary, high-value purchases. But unfortunately, it will force others to turn to credit to make ends meet.

The deteriorating situation will lead to higher defaults in the lending market, which will limit future borrowing options for some. It also presents a challenging climate for lenders as they try to support borrowers while at the same time managing the financial impact of rising arrears.

  • 36% of UK consumers currently owe money on a credit card.
  • 58% of adults are worried about using Buy Now, Pay Later services.
  • 15% of adults have used an advice service to help manage their borrowing/debt.
  • 48% of Britons would rather borrow money from friends or family than use credit products.

 

Future Trends in the UK Lending Market

However, economic uncertainty also creates opportunities for the lending market. Consumers will be looking to lower the cost of borrowing, which could mean more opportunities for brokers in the credit market to offer access to cheaper credit options. There will also be opportunities for money management support and more referrals to debt advice services that help people budget and make better decisions on how to structure the repayment of problem debt.

To discover more about the UK Attitudes Towards Debt and Credit Market Report 2022, read our UK Buy Now, Pay Later Financing Market Report 2022or take a look at our extensive Financial Services Market Research.

 

Quickly Understand

  • The impact of the cost of living crisis on the lending market and attitudes towards debt and credit.
  • The size of the secured and unsecured lending market.
  • Analysis of the credit market’s advertising and marketing activity, featuring selected brands.
  • Future intentions towards unsecured borrowing.
  • Analysis of the level of unsecured debt held by borrowers.
  • Borrowers’ experience in debt management and credit score checking.
  • Consumer attitudes towards credit use.

 

Covered in this Report

Brands: American Express, Nationwide, NewDay, Novuna, Zopa, Capital One, HSBC, Barclaycard, Clearpay, Klarna, Lloyds Bank, ClearScore, Experian, MoneySavingExpert, TotallyMoney, TransUnion, CheckMyFile, Equifax. 
Products: Secured and unsecured debt markets.

 

Expert Analysis from a UK Financial Specialist

This report, written by Alex Kharchenko, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends in the UK debt and credit market and add expert context to the numbers.

Consumer credit will continue growth in 2022 as the cost of living crisis drives demand for revolving credit. As the pressure on household finances increases and consumer confidence remains low, a growing proportion of consumers will be wary about their use of credit, especially for discretionary purchases. Others will turn to credit to help them manage the additional financial pressures, which will put pressure on lenders to demonstrate responsible lending practices and to provide money management support.”

Alex Kharchenko
Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Products covered in this Report
  2. Executive Summary

    • The market
    • Unsecured lending continues to grow, but consumer habits are changing
      • Figure 1: Gross consumer credit lending (excluding student loans), 2016-22
    • Consumer credit growth is driven by credit card lending
      • Figure 2: Gross credit card lending, 2016-22
    • A rise in interest rates is expected to cause a slowdown in mortgage lending
      • Figure 3: Gross mortgage lending, 2016-22
    • Debt write-offs fell in 2021 but look set to worsen as cost of living rises
      • Figure 4: Value of write-offs to individuals, 2011-21
    • The consumer
    • Two thirds of consumers hold some form of debt
      • Figure 5: Types of credit owned, 2022
    • Revolving credit will continue to drive unsecured borrowing
      • Figure 6: Future unsecured lending intentions, 2022
    • 23% of borrowers are open to using debt advice services
      • Figure 7: Usage of debt management tools, 2022
    • Two fifths have checked their credit score in the last 12 months
    • Most borrowers are comfortable with their debts …
    • … but there is scope to widen support among those who are struggling
      • Figure 8: Attitudes towards debt and credit, 2022
    • BNPL providers face reputational challenges as demand for day-to-day credit rises
      • Figure 9: Attitudes towards debt and credit, 2022
  3. Issues and Insights

    • Revolving credit will drive unsecured borrowing during cost of living crisis
    • Debt and payment anxiety is growing, especially among younger adults
  4. Unsecured Debt Market

    • Consumer credit lending increased by almost 15% in 2021
    • Cost of living crisis is changing habits and demand for different types of credit
      • Figure 10: Gross consumer credit lending (excluding student loans), 2016-22
    • Credit card lending drives growth in consumer credit
      • Figure 11: Gross credit card lending, 2016-22
    • Lower growth expected for other consumer credit
      • Figure 12: Gross other consumer credit lending (excluding credit cards), 2016-22
    • Net lending remains above pre-pandemic average, for now
      • Figure 13: Monthly consumer credit net lending (excluding student loans), 2011-22
    • Household debts are rising again after a pandemic-related fall
      • Figure 14: Monthly amounts outstanding of total sterling net unsecured lending to individuals (excluding student loans), 2011-22
  5. Secured Debt Market

    • Mortgage lending set for a more subdued period as interest rates rise
      • Figure 15: Gross mortgage lending, 2016-22
    • Remortgage activity will be a bigger driver of growth in short term
      • Figure 16: Monthly gross mortgage lending, by purpose, 2018-22
  6. Cost of Debt

    • Lenders focus on support as cost of unsecured borrowing increases
      • Figure 17: UK interest rates on unsecured credit products, 2016-22
    • Higher mortgage rates will impact household spending
      • Figure 18: Interest rates for selected types of mortgages, 2015-22
    • Learnings from the last income squeeze
  7. Write-offs, Bankruptcies and Insolvencies

    • Debt write-offs fell in 2021 but look set to worsen as cost of living rises
      • Figure 19: Value of write-offs to individuals, 2011-21
    • The number of bankruptcies decreased by 45% in 2021
      • Figure 20: Number of individual insolvencies, 2011-21
  8. Market Drivers

    • Inflation is the key concern for consumers and brands …
      • Figure 21: RPI vs CPI vs Wage growth monthly percentage change – Jan 2011 – August 2022
    • … and despite Government support, energy prices are still a major concern
    • Rising interest rates mean that the pressure will move up to middle and higher income households
    • High inflation and rising interest rates will weigh down the post-COVID recovery
    • Consumer spending power will be curbed
    • The conflict in Ukraine is hurting the UK economy in a number of ways
    • Consumers’ financial wellbeing has slipped away
      • Figure 22: Household financial wellbeing index, 2016-2022
  9. Regulatory and Legislative Changes

    • FCA confirms a new Consumer Duty
    • Reforms planned to the Consumer Credit Act
    • UK Government confirms BNPL regulation
    • Bank of England relaxes mortgage affordability rules
  10. Advertising and Marketing Activity

    • Above-the-line adspend increased by 23% in 2021/22
      • Figure 23: Total above-the-line, online display and direct mail advertising expenditure on credit and loan products, 2017/18-2021/22
    • American Express surpassed Nationwide as the top advertiser in 2021/22
      • Figure 24: Top 15 advertisers of above-the-line, online display and direct mail advertising of credit and loan products, 2021/22
    • Cost of living crisis poses additional challenges for advertising credit products
    • Nielsen Ad Intel coverage
  11. Brand Research

    • Brand map
      • Figure 25: Attitudes towards and usage of selected brands, 2022
    • Key brand metrics
      • Figure 26: Key metrics for selected brands, 2022
    • Brand attitudes: HSBC and Barclaycard are seen as a trusted brands
      • Figure 27: Attitudes, by brand, 2022
    • Brand personality: American Express stands out as being seen as exclusive
      • Figure 28: Brand personality – Macro image, 2022
    • HSBC and Barclaycard are more likely to be seen as competent and reliable
      • Figure 29: Brand personality – Micro image, 2022
    • Brand analysis
    • Barclaycard and HSBC benefit from widespread familiarity and use
    • American Express has a strong brand identity …
    • … but Capital One struggles for differentiation
    • Lower awareness makes it harder for Zopa and Novuna to stand out
  12. Types of Credit Held

    • Two thirds of consumers hold some form of debt
    • Credit cards are the leading credit product …
    • … but Gen Z are increasingly turning to BNPL
      • Figure 30: Types of credit owned, 2022
    • 25-44s are more likely to be multiple credit users
      • Figure 31: Repertoire for credit ownership, by credit products held, 2022
  13. Expected Use of Unsecured Credit in the Next 12 Months

    • Revolving credit will continue to drive unsecured borrowing …
    • … with a growing number turning to credit to help prop up their finances
      • Figure 32: Future unsecured lending intentions, 2022
    • Increase in demand for credit products from overstretched borrowers
      • Figure 33: Repertoire for multiple sources of credit over the next 12 months, 2022
  14. Value of Unsecured Credit

    • Most borrowers with larger debts are coping, for now
    • Higher mortgage costs could force some to reassess level of unsecured borrowing
      • Figure 34: Total level of unsecured debt, 2022
  15. Use of and Interest in Debt Advice Services

    • Almost half of borrowers have no experience of or interest in debt advice
    • Opportunities to expand pre-emptive help
      • Figure 35: Usage of debt management tools, 2022
    • Borrowers will benefit from clear pathways to advice
      • Figure 36: Debt management tools/advice services, 2022
  16. Use of Credit Monitoring Services

    • Two fifths have checked their credit score in the last 12 months
    • Banks are playing a growing role in credit monitoring
      • Figure 37: Credit score check activity, 2022
    • 49% checking credit score used ClearScore in 12 months to June
      • Figure 38: Credit score checking tools, 2022
  17. Attitudes towards Credit and Debt

    • Most borrowers are comfortable with their debts …
    • … but there is scope to widen support among those who are struggling
      • Figure 39: Attitudes towards debt and credit, 2022
    • Keeping up with payments is a concern for young borrowers
    • BNPL providers face reputational challenges as demand for day-to-day credit rises
      • Figure 40: Attitudes towards debt and credit, 2022
  18. 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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