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UK Consumer Attitudes Towards Debt market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Consumer Atttiudes towards Debt: Inc Impact of COVID-19 - UK 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? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

COVID-19 has produced an unprecedented shock to household finances. Lockdown has severely reduced consumer spending and this has resulted in a massive drop in outstanding consumer credit. While some of this will return as lockdown eases, the looming unemployment crisis will further impact both the secured and unsecured lending sectors.

All reports purchased from the Mintel Store now come with free access to our COVID-19 Global Insights Hub, allowing you to understand how industries and consumer behaviour is changing worldwide.


What does the COVID-19 Global Insights Hub give you access to?

  • Over 450 pieces of research (with more published each week) addressing markets across the globe.
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  • Trending industries which have seen growth due to the changes in circumstance.
  • Our latest consumer research surveys, allowing you to see customers views right now.

Expert analysis from a specialist in the field

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

The rapid reduction in consumer spending caused by lockdown has resulted in a severe drop in outstanding consumer credit but COVID-19 has also seriously knocked the confidence of some borrowers. Older Millennials are most heavily reliant on unsecured debt, but their comfort with borrowing has been severely shaken and there is a risk that this will permanently affect their attitudes towards borrowing. Meanwhile, the attitudes of younger adults towards debt are being forged by their experience of being at the forefront of the economic fallout of COVID-19 Thomas Slide
Senior Finance Analyst

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What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Products covered in this Report
          • COVID-19: Market context
            • Economic assumptions
            • Executive Summary

                • The market
                  • COVID-19 crisis has made consumers more cautious about debt
                    • Figure 1: Forecast of gross consumer credit lending (adjusted for COVID-19), 2015-25
                  • Secured lending will dip in 2020 before recovering in 2021
                    • Figure 2: Forecast of gross mortgage lending (adjusted for COVID-19), 2015-25
                  • New rules lead to a spike in the cost of overdrafts
                    • Government interventions protect finances…for now
                      • Unemployment is set to more than double during 2020
                        • COVID-19 and Brexit may shift regulatory priorities
                          • The impact of COVID-19
                            • Short-, medium- and long-term impact on the industry
                              • Figure 3: Expected impact of COVID-19 on Consumer credit, short-, medium- and long-term, 21 July 2020
                            • Short term:
                              • Medium term:
                                • Long-term:
                                  • The consumer
                                    • Credit cards are the most common form of debt
                                      • Figure 4: Types of credit owned, May 2020
                                    • Older Millennials are most indebted
                                      • Figure 5: Amount of unsecured credit held, May 2020
                                    • A third reduced their debts in the past two years
                                      • Figure 6: Changes in the amount of unsecured debt, June 2019/May 2020
                                    • Consumers are focussed on reducing debt
                                      • Figure 7: Debt intentions, June 2019/May 2020
                                    • Consumers are less comfortable with their debt
                                      • Figure 8: Comfort with current level of debt, June 2019/May 2020
                                    • One in seven has put off making a large purchase on credit
                                      • Figure 9: Actions taken in response to COVID-19, May 2020
                                    • Most people trust themselves to use credit responsibly
                                      • Figure 10: Experiences of debt, May 2020
                                    • Over half think lenders can be a force for good
                                      • Figure 11: Attitudes towards debt, May 2020
                                    • What we think
                                    • The Impact of COVID-19 on Consumer Attitudes Towards Debt

                                      • Opportunities and Threats
                                        • Lockdown advertising resonates with worried consumers
                                          • An expectation of increasing costs could drive more people to restructure debt
                                            • Growth in online shopping will affect the type of credit used
                                              • Older Millennials’ attitudes towards debt has been shaken
                                                • How COVID-19 will reshape the market
                                                  • What we saw in the last recession
                                                    • What will happen this time
                                                      • The impact of COVID-19 on Consumers
                                                        • Young people are hardest hit by the lockdown
                                                          • Fear of job losses will prove an obstacle to new credit
                                                            • Fears about house prices could be a self-fulfilling prophecy
                                                              • Even affluent households are putting off large purchases on credit
                                                                • Repayment holidays are borrowing from future spending
                                                                • Issues and Insights

                                                                  • Lenders will face a PR challenge as debt holidays come to an end
                                                                    • The facts
                                                                      • The implications
                                                                        • COVID-19 could prove a tipping point in how Older Millennials view debt
                                                                          • The facts
                                                                            • The implications
                                                                              • A holistic and supportive approach to lending will appeal to Generation Z
                                                                                • The facts
                                                                                  • The implications
                                                                                  • The Market – What You Need to Know

                                                                                    • Unsecured lending drops but growth will return
                                                                                      • Secured lending will dip in 2020 before recovering in 2021
                                                                                        • New rules lead to a spike in the cost of overdrafts
                                                                                          • Government interventions protect finances…for now
                                                                                            • Unemployment is set to more than double during 2020…
                                                                                              • COVID-19 and Brexit may shift regulatory priorities
                                                                                                • Lockdown solidarity resonates with consumers
                                                                                                • Unsecured Debt – Market Context

                                                                                                  • Outstanding debt falls even as repayments slow
                                                                                                    • Figure 12: Monthly amounts outstanding of total (excluding Student Loans) sterling net unsecured lending to individuals, January 2010-April 2020
                                                                                                  • Consumers were repaying credit card debt prior to COVID-19
                                                                                                    • Figure 13: Consumer credit flows, January 2017-April 2020
                                                                                                  • Credit cards have experienced a steady decline
                                                                                                    • Figure 14: Segmentation of outstanding consumer credit, 2015-20
                                                                                                  • Consumer credit dented by falling appetite for big-ticket purchases
                                                                                                    • Figure 15: Forecast of gross consumer credit lending (adjusted for COVID-19), 2015-25
                                                                                                • Secured Debt – Market Context

                                                                                                  • Gross mortgage lending falls slightly in 2019
                                                                                                      • Figure 16: Gross mortgage lending, not seasonally adjusted, 2005-19
                                                                                                    • Approvals collapsed in April
                                                                                                      • Figure 17: Number of approvals for lending to individuals, not seasonally adjusted, January 2019-Apr 2020
                                                                                                    • Mortgage lending forecast to contract by a fifth
                                                                                                      • Figure 18: Forecast of gross mortgage lending (adjusted for COVID-19), 2015-25
                                                                                                  • Cost of Debt

                                                                                                    • New rules lead to a spike in the cost of overdrafts
                                                                                                      • Cost of loans has fallen as credit cards become more expensive
                                                                                                        • Figure 19: UK interest rates on unsecured credit products, January 2010-May 2020
                                                                                                      • Competition drives down the cost of fixed rate mortgages
                                                                                                        • Figure 20: Quoted household mortgage rates, January 2017-May 2020
                                                                                                      • COVID-19 makes it more expensive for first-time buyers
                                                                                                        • Figure 21: Average cost of 2 year fixed rate mortgages, by LTV ratio, January 2017-May 2020
                                                                                                    • Consumer Context

                                                                                                      • Government interventions protect many households for now…
                                                                                                        • …but people have noticed a change
                                                                                                          • Future confidence has tumbled
                                                                                                              • Figure 22: The financial well-being index, January 2017-June 2020
                                                                                                            • Fears of job losses will have a negative impact on the market
                                                                                                                • Figure 23: Expected impact of COVID-19 on the UK economy, 11-18 June 2020
                                                                                                              • Consumers think house prices will take a hit
                                                                                                                  • Figure 24: Expected impact of COVID-19 on the UK economy, 11-18 June 2020
                                                                                                                • 30% have put off major purchases
                                                                                                                    • Figure 25: Financial impact of COVID-19, 21 - 28 May 2020
                                                                                                                • Economic Outlook

                                                                                                                  • Economy will return to pre-crisis size by late 2021
                                                                                                                    • Figure 26: Annual GDP, 2007-24 (central forecast)
                                                                                                                  • Unemployment is set to more than double during 2020…
                                                                                                                    • Figure 27: Annual unemployment rate, 2007-24
                                                                                                                  • Housing transactions decline for three years running
                                                                                                                    • Figure 28: Annual change in residential housing transactions over £40,000 (non-seasonally adjusted, calendar year), 2008-19
                                                                                                                  • New and used car sales continue to decline
                                                                                                                    • Figure 29: New and used car market volumes, 2014-19
                                                                                                                • Write-offs, Repossessions and Insolvencies

                                                                                                                  • Value of write-offs rises for two years running
                                                                                                                    • Figure 30: Value of write-offs to individuals, 2010-19
                                                                                                                  • Mortgage arrears at historically low levels going into COVID-19
                                                                                                                    • Figure 31: Quarterly mortgage arrears (at least 2.5%) and repossessions, Q1 2017-Q1 2020
                                                                                                                  • Insecure employment behind a steady rise in IVAs
                                                                                                                    • Figure 32: Number of individual insolvencies, 2010-19
                                                                                                                • Regulatory and Legislative Changes

                                                                                                                  • COVID-19 may shift regulatory priorities
                                                                                                                    • FCA implements support for those struggling because of coronavirus
                                                                                                                      • Stamp duty relief implemented to boost housing sector
                                                                                                                        • Government provides additional funding for debt advice
                                                                                                                          • Ban on gambling by credit card
                                                                                                                            • Fall in complaints about credit products as PPI deadline passes
                                                                                                                              • Figure 33: New cases to the Financial Ombudsman Service, by industry, 2018/19-2019/20
                                                                                                                            • Fines for overcharging mortgage customers
                                                                                                                            • Advertising and Marketing Activity

                                                                                                                              • Halifax takes over as the biggest spender on advertising
                                                                                                                                • Figure 34: Advertising expenditure, by advertiser, 2019/20
                                                                                                                              • Competitive mortgage market drives adspend
                                                                                                                                • Figure 35: Advertising expenditure on credit and loan products, by product segmentation, 2015/16-2019/20
                                                                                                                              • Support is a key theme for credit card advertising
                                                                                                                                • Using Katherine Ryan to explain Section 75
                                                                                                                                  • Figure 36: Barclaycard - Holiday Essentials, July 2019
                                                                                                                                • Educating consumers to prepare for the future
                                                                                                                                  • Figure 37: Barclaycard app, June 2020
                                                                                                                                • New credit propositions focus on identity and placement
                                                                                                                                  • Figure 38: Klarna retailer partnership advertising, September 2019
                                                                                                                                • Where next
                                                                                                                                  • Flexibility and understanding will be key in a recession
                                                                                                                                    • Supporting savvy shoppers
                                                                                                                                      • Enabling consumers in the shift to the ‘next normal’
                                                                                                                                        • Credit for the Green Recovery
                                                                                                                                        • The Consumer – What You Need to Know

                                                                                                                                          • Credit cards are the most common form of debt
                                                                                                                                            • Older Millennials are most indebted
                                                                                                                                              • A third reduced their debts in the past two years
                                                                                                                                                • Consumers are focussed on reducing debt
                                                                                                                                                  • Consumers have become less comfortable with their debts
                                                                                                                                                    • One in seven has put off making a large purchase on credit
                                                                                                                                                      • Most people trust themselves to use credit responsibly
                                                                                                                                                        • Over half think lenders can be a force for good
                                                                                                                                                        • Types of Credit Held

                                                                                                                                                          • Credit cards are the most common form of debt
                                                                                                                                                            • Figure 39: Types of credit owned, May 2020
                                                                                                                                                          • Credit card use among low income households grows
                                                                                                                                                            • Figure 40: Holders of credit card debt, by household income, June 2019/May 2020
                                                                                                                                                          • Credit card use among young people may have peaked
                                                                                                                                                            • Figure 41: 18-24 year olds with credit card debt, May 2015-May 2020
                                                                                                                                                          • A third of Older Millennials have three or more debt products
                                                                                                                                                            • Figure 42: Repertoire analysis of debt products, by generation, May 2020
                                                                                                                                                        • Value of Unsecured Debt

                                                                                                                                                          • Older Millennials are most indebted
                                                                                                                                                            • Figure 43: Amount of unsecured credit held, by generation, May 2020
                                                                                                                                                          • Debt has become increasingly focussed on the young
                                                                                                                                                            • Figure 44: Average unsecured debt, by age group, May 2014-May 2020
                                                                                                                                                        • Changes in Debt Situation

                                                                                                                                                          • A third reduced their debts
                                                                                                                                                            • Figure 45: Changes in the amount of unsecured debt, June 2019/May 2020
                                                                                                                                                          • 45-54 year olds are most likely to have reduced their debt
                                                                                                                                                            • Figure 46: Changes in the amount of unsecured debt, by age group, May 2020
                                                                                                                                                        • Debt Intentions

                                                                                                                                                          • Consumers are focussed on reducing debt
                                                                                                                                                              • Figure 47: Debt intentions, June 2019/May 2020
                                                                                                                                                            • Men are more optimistic about clearing debt
                                                                                                                                                              • Figure 48: Debt intentions, by age group, May 2020
                                                                                                                                                          • Comfort with Level of Debt

                                                                                                                                                            • People are less comfortable about debt
                                                                                                                                                              • Figure 49: Comfort with current level of debt, June 2019/May 2020
                                                                                                                                                            • Older Millennials feeling increasingly uncomfortable
                                                                                                                                                              • Figure 50: Net – Any uncomfortable with current level of debt, by generation, June 2019/May 2020
                                                                                                                                                            • Londoners are most uncomfortable with their debt
                                                                                                                                                              • Figure 51: Comfort with current level of debt, net - any uncomfortable, by region, May 2020
                                                                                                                                                          • Impact of COVID-19 on Credit and Debt

                                                                                                                                                            • One in seven has put off making a large purchase on credit
                                                                                                                                                              • Figure 52: Actions taken in response to COVID-19, May 2020
                                                                                                                                                            • 15% of mortgage holders applied for a repayment holiday
                                                                                                                                                                • Figure 53: Actions in response to COVID-19, rebased, May 2020
                                                                                                                                                              • Gen Z are most reliant on government support
                                                                                                                                                                • Figure 54: Actions taken in response to COVID-19, by generation, May 2020
                                                                                                                                                              • Self-employed and temporary workers fall through the gaps
                                                                                                                                                                • Figure 55: “Taken on additional debts”, by employment status, May 2020
                                                                                                                                                            • Experiences of Debt

                                                                                                                                                              • Most people trust themselves to use credit responsibly
                                                                                                                                                                • Figure 56: Experiences of debt, May 2020
                                                                                                                                                              • City-dwelling parents are most concerned about COVID-19
                                                                                                                                                                • Figure 57: Consumer Attitudes Towards Debt – CHAID – Tree output, May 2020
                                                                                                                                                              • Gen Z are fearful of impacting their credit rating
                                                                                                                                                                • Figure 58: “Fear of being turned down puts me off applying for new credit products”, by generation, May 2020
                                                                                                                                                              • A third of men under 35 have missed a repayment
                                                                                                                                                                • Figure 59: “I've missed at least one repayment on a mortgage, loan or credit card in the past 3 years”, by age and gender, May 2020
                                                                                                                                                            • Attitudes Towards Debt

                                                                                                                                                              • Most expect the cost of debt to increase
                                                                                                                                                                • Figure 60: Attitudes towards debt, May 2020
                                                                                                                                                              • An opportunity for lenders to be a force for good
                                                                                                                                                                • Young people are most positive about lenders
                                                                                                                                                                  • Figure 61: Attitudes towards Debt, by generation, May 2020
                                                                                                                                                                • A reluctance to talk harms relationships and credit ratings
                                                                                                                                                                  • Figure 62: Agreement with the statement “It's embarrassing to talk to friends/family about debt”, by experience of debt, May 2020
                                                                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                  • Abbreviations
                                                                                                                                                                    • Nielsen Ad Intel coverage
                                                                                                                                                                      • Consumer research methodology
                                                                                                                                                                        • CHAID analysis
                                                                                                                                                                          • Figure 63: Consumer Attitudes Towards Debt – CHAID – Table output, May 2020
                                                                                                                                                                          • Figure 64: Consumer Attitudes Towards Debt – CHAID – Table output, May 2020

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