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- UK Personal Loans Market Report 2023
UK Personal Loans Market Report 2023
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The UK Personal Loans 2023 Market Report establishes consumers’ attitudes towards credit products, financial confidence with inflation, and opportunities for lenders to appeal to consumers. This report covers the market size, market forecast, and industry trends for the UK personal loans market.
The personal loans market is continuing to recover from COVID-19, but rising interest rates amid inflation will now prompt caution among consumers. 47% of UK adults don’t feel comfortable using credit products to borrow money, while many Brits are concerned that the cost of borrowing is rising. This reflects a defensive approach among consumers towards the personal loan market, and borrowing in general.
Consumers’ confidence in their ability to take on new financial commitments fell sharply in 2022, and is expected to remain subdued in 2023. Despite this, as consumers overwhelmingly predict interest rates to keep rising, some may be taking advantage of current interest rates.
Retail banks continue to dominate the unsecured loans market. Half of UK adults with a structured personal loan state their loan is with a bank, building society, or major retailer, while less are using specialist lenders. This may demonstrate that borrowers are more ready to trust larger lenders, especially if they are already using them for other services such as a current account. However, specialist lenders can appeal given the popularity of price comparison websites, should they be able to compete on interest rates.
Lenders of any kind can position themselves as a feasible option for financially vulnerable customers through the cost of living crisis. Providers should ensure that tailored support is available to vulnerable customers, and that their repayments are sustainable. Marketing loans as a cost-effective way of borrowing could also show the value advantage of loans to consumers managing multiple credit products.
While the unsecured loan market suffered severely in the last recession due to a credit crunch and restrictions on lending, this is not the case this time around. With current inflationary pressures, consumer confidence is the main issue. As inflation eases, consumer confidence will increase. This sums up Mintel’s forecast, which sees the personal loan market value increase consistently beyond 2023, over the next few years.
To discover more about the UK Personal Loans Market, read our UK Consumers and Financial Advice Market Report, or take a look at our extensive Financial Services market research.
Products: Personal loans, high-cost short-term credit loans, payday loans, guarantor loans, P2P loans.
Brands/lenders: Lloyds Banking Group, HSBC, NatWest Group, Barclays, Santander, Nationwide, Virgin, Tesco Bank, Sainsbury’s Bank, Leap Lending, Shawbrook Bank, Zopa Bank, Fluro, Plend, Switchd, JustLend, Punk Money, Loop Money, Amigo Loans, Amplifi Capital, Reevoo Money, Experian, AA, Admiral, Bank of Ireland, Cahoot, The Post Office, RateSetter.
This report, written by Greta Staselyte, a leading analyst in the Financial Services sector, delivers in-depth commentary and analysis to highlight current trends in the UK Personal Loans market and add expert context to the numbers.
Personal loans lending has gradually recovered from the impact of COVID-19 but remains below pre-pandemic levels. The rising cost of living provides a new challenge for lenders, as a cautious consumer mindset and rising interest rates will dampen demand for new loans throughout 2023.
Greta Staselyte
Financial Services Analyst
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