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Description

Description

“The personal loans market enjoyed bumper growth through most of the 2010s. However, as the decade has come to an end, growth has slumped, due to tightening lending criteria and weakened appetite among consumers to make financial commitments amid Brexit uncertainty. Despite this, signs for the future are positive, with low rates incentivising people to borrow for major purchases.”
- Rich Shepherd, Associate Director – Financial Services

This report will look at the following areas:

  • Greater transparency is needed to boost trust in lenders
  • Personal loans are still unacceptable for some
  • Loan providers will welcome clarity over Brexit

What's included

What's included

Table of contents

Table of contents

  1. Overview

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

          • The market
            • Personal loans advances estimated to have grown to £42 billion in 2019…
              • Figure 1: Unsecured personal loans gross advances, 2015-19*
            • …and forecast to rise to £49 billion by 2024
              • Figure 2: Forecast of the value of unsecured personal loans, by gross advances, 2014-24
            • Low interest rates maintain the appeal of personal loans
              • Figure 3: Bank of England base rate and quoted interest rates for personal loans, credit cards and overdrafts, January 2015-November 2019
            • Companies and brands
              • LBG holds the largest personal loans book, followed by RBS Group
                • Figure 4: Value of outstanding balances for unsecured personal loans/unsecured lending, by selected providers, 2018
              • Above-the-line adspend fell by 55% in 2018/19
                • Figure 5: Total above-the line, online display and direct mail advertising expenditure on unsecured personal loans and payday loans, 2014/15-2018/19
              • Major banks are ahead of challengers on trust
                • Figure 6: Attitudes towards and usage of selected brands, December 2019
              • The consumer
                • Half of consumers have outstanding unsecured debt
                  • Figure 7: Loan and credit product ownership, October 2019
                • Banks, building societies and major retailers dominate the loans market
                  • Figure 8: Type of loan money is owed on, October 2019
                • Half of borrowers took out more than £5,000…
                  • Figure 9: Amount borrowed on most recent structured unsecured loan (NETs), October 2019
                • …and most prefer shorter terms
                  • Figure 10: Term of most recent structured unsecured loan, October 2019
                • 12% say they are likely to apply for a loan in the next year
                  • Figure 11: Likelihood to apply for a new unsecured personal loan in the next 12 months, October 2019
                • Most are confident that they would be accepted for a loan
                  • Figure 12: Unsecured loans research behaviours, October 2019
                • Trust issues could be hampering lenders
                  • Figure 13: Consumer attitudes towards unsecured loans, October 2019
                • What we think
                • Issues and Insights

                  • Greater transparency is needed to boost trust in lenders
                    • The facts
                      • The implications
                        • Personal loans are still unacceptable for some
                          • The facts
                            • The implications
                              • Loan providers will welcome clarity over Brexit
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Personal loans advances estimated to have grown to £42 billion in 2019…
                                      • …and forecast to rise to £49 billion by 2024
                                        • Low interest rates maintain the appeal of personal loans
                                          • Credit market hit by a series of regulatory interventions
                                          • Market Size and Forecast

                                            • Unsecured lending growth has slowed
                                              • Figure 14: Gross unsecured lending, by category, January 2015-September 2019
                                            • Personal loans lending remained flat in 2019
                                              • Figure 15: Other consumer credit consumer, including personal loans, 2015-19*
                                            • Credit cards continue to grow more quickly than other consumer credit
                                              • Figure 16: Gross unsecured lending, 2015-19*
                                            • Personal loans advances forecast to reach £49 billion by 2024
                                              • Figure 17: Forecast of the value of unsecured personal loans, by gross advances, 2014-24
                                              • Figure 18: Forecast of the value of unsecured personal loans, by gross advances, at current and constant prices, 2014-24
                                            • Forecast methodology
                                            • Market Drivers

                                              • Low interest rates maintain the appeal of personal loans
                                                • Figure 19: Bank of England base rate and quoted interest rates for personal loans, credit cards and overdrafts, January 2015-November 2019
                                              • Other unsecured lending write-offs has more than doubled since 2017
                                                • Figure 20: Annual write-offs of other unsecured lending to individuals, 2014-19*
                                              • Real wages have grown consistently since the start of 2018
                                                • Figure 21: Annual change in wages and inflation, January 2016-September 2019
                                              • Consumers are positive about their finances…
                                                • Figure 22: Mintel’s financial well-being index, January 2015-November 2019
                                              • …and confident about the year ahead
                                                • Figure 23: Mintel’s financial confidence index, January 2015-November 2019
                                            • Regulatory and Legislative Changes

                                              • Consumer credit has been affected by a flurry of regulatory changes
                                                • More payday lenders go to the wall
                                                  • FCA introduces new high-cost credit rules
                                                    • Arranged overdraft rates to rise as ban on higher unarranged fees comes into force
                                                      • Guarantor loans may be next on the regulator’s agenda
                                                      • Companies and Brands – What You Need to Know

                                                        • RBS Group closes the gap on LBG at the top of the loans market
                                                          • Transparency is a key focus for lenders
                                                            • Above-the-line adspend fell by 55% in 2018/19
                                                              • Major banks are ahead of challengers on trust
                                                              • Market Share

                                                                • RBS Group closes the gap on LBG at the top of the loans market
                                                                  • Figure 24: Value of outstanding balances for unsecured personal loans/unsecured lending, by selected providers, 2016-18
                                                                • Supermarket brands continue to increase their unsecure lending profiles
                                                                • Competitive Strategies

                                                                  • A competitive environment
                                                                    • Transparency in eligibility
                                                                      • Monzo enters the loans market with a wide scope
                                                                        • Marketplace banking offers a new way to find the best deal
                                                                        • Advertising and Marketing Activity

                                                                          • Above-the-line adspend fell by 55% in 2018/19
                                                                            • Figure 25: Total above-the line, online display and direct mail advertising expenditure on unsecured personal loans and payday loans, 2014/15-2018/19
                                                                          • Sub-prime lenders continue to dominate adspend
                                                                            • Figure 26: Top 10 spenders on advertising for unsecured personal loans and payday loans, 2016/16-2018/19
                                                                          • TV is by far the most popular media type
                                                                            • Figure 27: Total above-the line, online display and direct mail advertising expenditure on unsecured personal loans and payday loans, by media type, 2018/19
                                                                          • Nielsen Ad Intel coverage
                                                                          • Brand Research

                                                                            • Brand map
                                                                              • Major banks are ahead of challengers on trust
                                                                                • Figure 28: Attitudes towards and usage of selected brands, December 2019
                                                                              • Key brand metrics
                                                                                • Monzo wins on customer experience and recommendations
                                                                                  • Figure 29: Key metrics for selected brands, December 2019
                                                                                • Brand attitudes: Big banks most likely to be trusted and have good reputations
                                                                                  • Figure 30: Attitudes, by brand, December 2019
                                                                                • Brand personality: Monzo and Zopa are more fun but less accessible than big banks
                                                                                  • Figure 31: Brand personality – macro image, December 2019
                                                                                • Brand personality: Sainsbury’s is seen as an affordable and reliable alternative
                                                                                  • Figure 32: Brand personality – micro image, December 2019
                                                                                • Brand Analysis
                                                                                  • Heritage is a valuable commodity
                                                                                    • Monzo is seen as a progressive option, but translating this to lending is difficult
                                                                                      • Responses to Zopa suggest P2P lenders still have work to do
                                                                                      • The Consumer – What You Need to Know

                                                                                        • Half of consumers have outstanding unsecured debt
                                                                                          • Banks, building societies and major retailers dominate the loans market
                                                                                            • Half of borrowers took out more than £5,000 and prefer shorter terms
                                                                                              • 12% say they are likely to apply for a loan in the next year
                                                                                                • Consumers are confident that they would be accepted for a loan
                                                                                                  • Trust issues could be hampering lenders
                                                                                                  • Loan and Credit Product Ownership

                                                                                                    • Half of consumers have outstanding unsecured debt…
                                                                                                      • Figure 33: Loan and credit product ownership, October 2019
                                                                                                    • …rising to 69% of Millennials
                                                                                                      • Figure 34: Any loan and credit product ownership, by generation, October 2019
                                                                                                    • One in 10 owes money on three or more products
                                                                                                      • Figure 35: Number of loan and credit products that consumers currently owe money on, October 2019
                                                                                                      • Figure 36: Loan and credit product ownership, by number of loan and credit products that consumers currently owe money on, October 2019
                                                                                                  • Type of Loan Held

                                                                                                    • Half of loans are borrowed from banks, building societies and retailers
                                                                                                      • Figure 37: Type of loan money is owed on, October 2019
                                                                                                    • 23% of loan customers have a high cost credit product
                                                                                                      • Figure 38: Type of loan money is owed on (NETs), October 2019
                                                                                                  • Loan Value and Term

                                                                                                    • Half of borrowers took out more than £5,000…
                                                                                                      • Figure 39: Amount borrowed on most recent structured unsecured loan, October 2019
                                                                                                      • Figure 40: Amount borrowed on most recent structured unsecured loan (NETs), October 2019
                                                                                                    • …but a significant minority borrowed much more modest amounts
                                                                                                      • Consumers prefer shorter repayment schedules
                                                                                                        • Figure 41: Term of most recent structured unsecured loan, October 2019
                                                                                                    • Future Loan Borrowing Plans

                                                                                                      • 12% say they are likely to apply for a loan in the next year
                                                                                                        • Figure 42: Likelihood to apply for a new unsecured personal loan in the next 12 months, October 2019
                                                                                                      • Urban consumers more likely to have borrowing plans
                                                                                                        • Figure 43: Likelihood to apply for a new unsecured personal loan in the next 12 months, by area, October 2019
                                                                                                    • Researching and Arranging Unsecured Loans

                                                                                                      • Consumers are confident that they would be accepted for a loan
                                                                                                        • Figure 44: Unsecured loans research behaviours, October 2019
                                                                                                      • Shopping around is only widespread before applying for loans
                                                                                                        • Convenience appeals more to younger current and potential borrowers
                                                                                                          • Figure 45: Responses to the statement “Whether I’m likely to be accepted for a loan is more important to me than the interest rate”, by age and area, October 2019
                                                                                                        • Current account providers retain a home advantage
                                                                                                        • Attitudes towards Unsecured Loans

                                                                                                          • Trust issues could be hampering lenders
                                                                                                            • Figure 46: Consumer attitudes towards unsecured loans, October 2019
                                                                                                          • Personal loans are a last resort for many
                                                                                                            • Figure 47: Responses to the statement “It is more socially acceptable to use a credit card than a personal loan to make an expensive purchase”, by age, October 2019
                                                                                                          • A third are wary of borrowing amid Brexit uncertainty
                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                              • Abbreviations
                                                                                                                • Consumer research methodology
                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                  • Market forecast best/worst case outcomes
                                                                                                                    • Figure 48: Best and worst case forecasts for the value of unsecured personal loans, by gross advances, 2019-24
                                                                                                                  • Forecast methodology

                                                                                                                  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 tables of data are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

                                                                                                                  Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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