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UK Consumer Attitudes Towards Credit Products Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Consumer Attitudes towards Credit Products market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Products covered in this report

This Report examines both secured and unsecured lending. For the purposes of the Report, these two types of credit are defined as follows:

Secured lending – lending that is secured against a property, ie the ownership of the property is at risk if repayments are not made to clear the debt. This is primarily mortgages used to purchase properties, but also includes homeowner loans where homeowners borrow additional funds secured against their home.

Unsecured lending – any type of lending that does not fit the definition of secured lending, ie lending that is not secured against a property. This includes a wide range of consumer credit products such as credit cards, personal loans, and current account overdraft facilities. Please note that this definition also includes car finance plans which can be secured against the vehicle being purchased.

What you need to know

Cheap credit and rising consumer confidence has ensured continued growth in unsecured lending over the last few years, with the market reaching £272 billion in 2017. However, annual growth has fallen for the second year running, signalling a decrease in appetite for credit. Similarly, growth in mortgage lending has continued, but at a much slower rate than in 2016.

In November 2017, the Bank of England increased the base rate for the first time in 10 years. This has prompted concerns about the impact of rising interest rates, and Mintel’s consumer research shows that the majority of people are hoping to clear or reduce their debt over the next two years.

However, despite these good intentions, the overall amount outstanding in unsecured debt continues to rise. Financial pressures on households are making it hard for people to reduce their debt, and when compared to Mintel’s 2017 consumer research, fewer people than before expect to fully clear debt, recognising that they will continue to rely on credit to help manage the cost of day-to-day expenses.

This Report analyses the current state of the unsecured and secured lending markets, and the key drivers affecting growth. It explores consumers’ attitudes towards credit products and their previous and expected borrowing going forward. It looks at what is important to people when choosing a credit provider, and the opportunities that Open Banking has created for innovation in helping people to manage their credit products.

Expert analysis from a specialist in the field

Written by Jessica Galletley, a leading analyst in the Financial Services sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Slower annual growth in lending signals a fall in demand, as concern around the potential impact of rising interest rates grows. But, affordability constraints will still make it difficult for many people to clear their debt and significantly reduce their borrowing. Open Banking gives lenders an opportunity to develop tools and services that can help people manage their debt more effectively and find products most suitable to their needs. Jessica Galletley
Financial Services Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this report
      • Executive Summary

          • The market
            • Borrowers continue to benefit from low rate environment
              • Figure 1: UK interest rates, January 2011-April 2018
            • Financial well-being holding up well
              • Figure 2: The financial well-being index, January 2015-May 2018
            • Value of lending continues to rise
              • Figure 3: Value of unsecured lending and annual growth rate, 2008-17
            • Value of mortgage lending rises by 4%
              • Figure 4: Gross mortgage lending, not seasonally adjusted, 2012-17
            • Falling value of write-offs indicates improved industry practice
              • Figure 5: Value of write-offs for individuals, not seasonally adjusted, 2012-17
            • The consumer
              • Two in three have some form of debt
                • Figure 6: Credit product ownership, April 2018
              • One in three owe less than £1,000
                • Figure 7: Value of outstanding unsecured debt, April 2018
              • Over half haven’t reduced their debt in the last two years
                • Figure 8: Debt situation over the last two years, April 2018
              • Borrowers are optimistic about reducing their debt
                • Figure 9: Expected debt situation in the next two years, April 2018
              • Two in three shop around for credit
                • Figure 10: Attitudes towards arranging new credit products, April 2018
              • Borrowers weigh up trust and cost when selecting a provider
                • Figure 11: Important factors when choosing a credit provider, April 2018
              • Significant interest in fintech-based lending innovation
                • Figure 12: Interest in new credit management products and services, April 2018
              • What we think
              • Issues and Insights

                • Credit management innovations will appeal to the anxious borrower
                  • The facts
                    • The implications
                      • Interest rate concerns see a significant fall in appetite for credit
                        • The facts
                          • The implications
                            • Open Banking will give newer players more of an edge
                              • The facts
                                • The implications
                                • The Market – What You Need to Know

                                  • Borrowers continue to benefit from low rate environment
                                    • Financial well-being index holds up well
                                      • Value of lending continues to rise
                                        • Value of mortgage lending rises by 4%
                                          • Falling value of write-offs indicates improved industry practice
                                          • Economic Outlook

                                            • GDP growth continues its downward trend
                                              • Figure 13: Gross domestic product, quarterly change (seasonally adjusted), Q1 2012-Q1 2018
                                            • Inflation exceeds earnings growth throughout 2017
                                              • Figure 14: Inflation, Bank of England base rate and Average Weekly Earnings growth, January 2010-March 2018
                                            • Unemployment falls to four-decade low
                                              • Figure 15: UK unemployment rate, Q1 2007-Q1 2018
                                            • Borrowers continue to benefit from low rates environment
                                              • Figure 16: UK interest rates, January 2011-April 2018
                                          • Consumer Financial Well-being

                                            • Financial well-being index holds strong
                                                • Figure 17: The financial well-being index, January 2015-May 2018
                                                • Figure 18: Current financial situation, May 2018
                                              • Financial situation has worsened over the last year
                                                  • Figure 19: Changes in household finances, January 2015-May 2018
                                                  • Figure 20: Changes in household finances, May 2018
                                                • Financial confidence recovered at the start of 2018
                                                    • Figure 21: The financial confidence index, January 2015-May 2018
                                                    • Figure 22: Consumer sentiment for the coming year, May 2018
                                                • Consumer Credit Lending

                                                  • Value of lending continues to rise
                                                      • Figure 23: Value of unsecured lending and annual growth rate, 2008-17
                                                    • Amount outstanding continues to rise
                                                        • Figure 24: Amounts outstanding of total (excluding the Student Loans Company) unsecured lending to individuals, not seasonally adjusted, January 2008-March 2018
                                                      • Credit cards account for majority of unsecured lending
                                                          • Figure 25: Consumer credit lending (excluding student loans), 2011-17
                                                        • FCA publishes update on high-cost credit
                                                        • Mortgage Market Lending

                                                          • Value of mortgage lending rises by 4%
                                                            • Figure 26: Gross mortgage lending, not seasonally adjusted, 2012-17
                                                          • House purchase approvals stall
                                                            • Figure 27: Annual number of mortgage approvals, by purpose, not seasonally adjusted, 2010-17
                                                        • Write-offs, Repossessions and Insolvencies

                                                          • Falling value of write-offs indicates improved industry practice
                                                            • Figure 28: Value of write-offs for individuals, not seasonally adjusted, 2012-17
                                                          • Mortgage arrears and repossessions remain low
                                                            • Figure 29: Quarterly mortgage arrears (at least 2.5%) and repossessions, Q1 2013-Q1 2018
                                                          • Insolvencies rise for second year
                                                            • Figure 30: Individual insolvencies in England and Wales, by type, not seasonally adjusted, 2013-17
                                                        • The Consumer – What You Need to Know

                                                          • Two in three have some form of debt
                                                            • One in three owe less than £1,000
                                                              • Over half haven’t reduced their debt in the last two years
                                                                • Two in three shop around for credit
                                                                  • Borrowers weigh up trust and cost when selecting a provider
                                                                    • Two in three interested in one or more innovations
                                                                    • Credit Product Ownership

                                                                      • Two in three have some form of debt
                                                                          • Figure 31: Credit product ownership, April 2018
                                                                        • Multiple credit users stand to benefit from account aggregators
                                                                          • Figure 32: Number of credit products currently owing money on, by household income, April 2018
                                                                      • Value of Outstanding Unsecured Debt

                                                                        • One in three owe less than £1,000
                                                                          • Figure 33: Value of outstanding unsecured debt, April 2018
                                                                        • Debt falls with age
                                                                          • Retirement debt is a growing concern
                                                                            • Figure 34: Value of outstanding unsecured debt, by age, April 2018
                                                                        • Debt Situation over the Last Two Years

                                                                          • Over half haven’t reduced their debt in the last two years
                                                                              • Figure 35: Debt situation over the last two years, April 2018
                                                                            • Lower value borrowers more likely to have kept their debt the same
                                                                              • Figure 36: Debt situation over the last two years, by value of unsecured debt, April 2018
                                                                            • Initial credit relationships are important
                                                                              • Figure 37: Debt situation over the last two years, April 2018
                                                                          • Expected Debt Situation in the Next Two Years

                                                                            • Borrowers are optimistic about reducing their debt
                                                                                • Figure 38: Expected debt situation in the next two years, April 2018
                                                                            • Arranging Credit Products

                                                                              • Two in three shop around for credit
                                                                                • Figure 39: Attitudes towards arranging new credit products, April 2018
                                                                              • Credit score awareness will improve application confidence
                                                                                  • Figure 40: Agreement with “Concerns about being rejected put me off applying for credit”, April 2018
                                                                                • Overdraft users disadvantaged by prioritising current account rewards
                                                                                  • Figure 41: Attitudes towards arranging new credit products, by ownership of credit products, April 2018
                                                                              • Attitudes towards Managing Debt

                                                                                • Two in three feel uncomfortable owing money
                                                                                  • Figure 42: Attitudes towards managing debt, April 2018
                                                                                • Young borrowers need clarification on the impact of rising rates
                                                                                    • Figure 43: Attitudes towards managing debt, by age, April 2018
                                                                                  • Half need help saving and repaying debt at the same time
                                                                                    • Case Study: LOQBOX helps people build a credit history through saving
                                                                                    • Important Factors When Choosing a Credit Provider

                                                                                      • Borrowers weigh up trust and cost when selecting a provider
                                                                                          • Figure 44: Important factors when choosing a credit provider, April 2018
                                                                                        • 18-34-year-olds can be enticed with added-value factors
                                                                                          • Figure 45: Important factors when choosing a credit provider, April 2018
                                                                                        • Providers should promote the speed of application
                                                                                        • Interest in Credit Management Innovations

                                                                                          • Two in three interested in one or more innovations
                                                                                            • Services must feel truly personal
                                                                                              • Figure 46: Interest in new credit management products and services, April 2018
                                                                                            • Borrowers owing over £10,000 more are most interested in automation
                                                                                              • Figure 47: Interest in new credit management products and services, by value of unsecured debt, April 2018
                                                                                            • Frequent credit users more interested in credit management services
                                                                                              • Figure 48: Interest in new credit management products and services, by number of credit products held, April 2018
                                                                                            • Case Study: Automated tools make meeting financial goals effortless
                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                • Abbreviations
                                                                                                  • Consumer research methodology