UK Personal Loans Market Report 2024
Interest rate rises have made loans more expensive, but demand remains high, both for aspirational goals and debt consolidation.
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Executive Summary
- Opportunities for the personal loans market
- Confusion around loan impact on credit scores can be reduced by improving product information
- Promote tailored loans to under-35s to benefit from greatest borrowing intent
- Providers must continue to offer support as economic concerns remain
- Market dynamics and outlook
- The five year outlook for personal loans
- Value of personal loan lending expected to rise by 18% to 2028
- Total consumer credit lending reaches new high in 2023
- Lloyds Banking Group leads unsecured lending market
- What consumers want and why
- Over half of Brits have unsecured debts
- Half of loans originate from traditional lenders
- Half of structured loans were taken out within the last year
- Most loan holders initially borrowed more than £5,000
- Prospective borrowers are drawn to loans for a wide range of reasons
- Low interest rates and flexible repayments key to new borrowing
- Ability to repay and economic doubts lead concerns around personal loans
- Innovation and Marketing
- Shawbrook Bank introduces new capability to reduce loan processing time
- Nationwide makes changes to offering as it upgrades its systems
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Market Dynamics
- Market size and performance
- Market forecast
- Market share
- Broader consumer credit environment
- Macro-economic factors
- Social, environmental and legal factors
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What Consumers Want and Why
- Loan and credit product ownership
- Over half of Brits have unsecured debts
- Credit cards and BNPL provide stiff competition to personal loans
- Most borrowers owe money on only one form of credit
- Personal loans more commonly held by those with multiple credit products…
- …as borrowers build-up experience and confidence before taking out a loan
- Type of loan held
- Half of loans originate from traditional lenders…
- …but specialist lenders play a major role
- Half of structured loans were taken out within the last year
- A quarter of loan borrowers have a high-cost credit product
- Value of most recent loan
- Borrowers are most likely to have taken a loan for between £5,000 and £10,000
- Most initially borrowed more than £5,000
- Future loan borrowing plans
- Appetite for personal loans remains healthy…
- …rising to a third of under-35s
- Higher earners most likely to take out a loan in the next year…
- …but weak financial resilience could also drive loan uptake
- Reasons to apply for a loan in the next 12 months
- Prospective borrowers are drawn to loans for a wide range of reasons
- Home improvements most common reason for potential loan ownership
- Lenders have opportunities to engage with those looking to consolidate debt and make ends meet…
- …but they must also offer support to protect those most vulnerable
- Important loan factors
- Low interest rates and flexible repayments key to new borrowing
- Getting the cheapest deal is essential for many, but not always easy to achieve
- Flexible repayment structures and payment holidays still favoured
- Lender reputation is key to building trust and customer use
- Attitudes towards personal loans
- Ability to repay and economic doubts lead concerns around personal loans
- Providers need to utilise customer data to ensure repayments are viable
- Lenders need to promote the benefits of digital channels…
- …that could also boost product awareness
- Under-35s most concerned about damaging their credit score
- Lenders need to reassure and support younger millennial workers…
- …who are most concerned about borrowing in the economic climate
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Innovation And Marketing Trends
- Competitive strategies and launch activities
- Aro adds Plend to its lending panel…
- …and partners with Money Expert to improve credit solutions
- Abound secures equity and debt financing to help improve access to loans
- Amplifi Capital agrees securitisation to expand Reevo Money
- Nationwide tightens access to loans as it upgrades its systems
- Paylink launches automated debt consolidation solution
- Advertising and marketing activity
- Sub- and near-prime lenders account for majority of adspend…
- …with Paypal the highest spender
- Digital channels attract highest overall ad spend…
- …but strategies differ between lenders
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Appendix
- Market forecast data and methodology
- Market forecast and prediction intervals
- Forecast methodology
- Report scope and definitions
- Market definition
- Abbreviations and terms
- Methodology
- Consumer research methodology
- CHAID analysis – methodology data
- Nielsen Ad Intel Coverage
Mintel’s UK Personal Loans Market Report 2024 provides an overview and analysis of the personal loans industry in the UK, including in-depth personal loan market statistics, consumer insights and innovations and marketing opportunities.
Key Issues Covered in this Report
- Market performance over the last five years and forecast for 2024-28.
- Market share of major unsecured loans providers.
- Ownership of unsecured loan products.
- Future borrowing plans.
- Loan purchase drivers.
- Consumer attitudes towards personal loans.
Personal Loans Market Landscape
As the impact of COVID-19 subsided, Mintel estimates that gross personal loans lending surpassed pre-pandemic levels in 2023. High inflation and rising interest rates have somewhat dampened interest in loans for big-ticket purchases. However, not all big-ticket purchases can be put off, and loans offer a key solution for consumers with little put aside in savings.
- UK personal loans market size: Mintel estimates that gross personal loans lending grew again in 2023, by 13% to £42.1 billion.
Over half of Brits have unsecured debts, with those aged 35-54 most likely to owe money on a personal loan. Retail banks, building societies and retailers account for 50% of existing personal loan customers. Traditional lenders provide a sense of safety and security for consumers when taking out a loan, as they have long track records of providing finance to individuals.
Consumer Insights and Opportunities for Lenders
For lenders, competing on interest rates is a key part of attracting new business. Almost half of existing or would-be borrowers consider low interest rates as an important factor when choosing a new loan. With rates having risen across the market, there is now more scope for cheaper products to stand out.
Purchase Mintel’s full report for more opportunities for growth in the UK personal loans market, alongside a complete overview and analysis of the market.
Expert Analysis from a Financial Services Specialist
This report, written by Lewis Cone, a leading Financial Services analyst, delivers in-depth commentary and analysis to highlight current trends in the UK personal loans market and add expert context to the numbers.
Interest rate rises have made loans more expensive, but demand remains high, both for aspirational goals and debt consolidation.
Lewis Cone
Associate Director – Financial Services
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