Description
Introduction
Datamonitor’s quarterly consumer credit outlook supplies the latest forecasts for lending up to 2015 based on the most up-to-date statistics. It also analyzes the context in which the market has operated in recent months, and discusses the likely impact of external factors on market performance in 2011 and beyond.
Features and benefits
• Provides data on the size of UK consumer credit market, at the total level and by product line, for both gross advances and balances outstanding.
• Assesses past performance and future prospects for the credit card, personal loan, overdraft, retail and motor finance lines over the next few years.
• Provides Datamonitor' s central gross lending forecasts for the consumer credit market, as well as forecasts for best-case and worst-case outcomes.
• Includes an accompanying interactive Excel model, presenting data in an easily accessible format.
Highlights
The outlook for consumer credit lending in 2011 is subdued. Worsening prospects for economic growth, unemployment, inflation and house prices have led to a severe weakening in consumer confidence in recent months, significantly reducing the inclination of consumers to borrow.
Following a difficult year in 2009, gross lending did recover modestly in 2010, with year-on-year increases seen in Q2, Q3 and Q4. Unsecured loans saw the biggest improvement, experiencing year-on-year growth in the final quarter for the first time since 2005. In contrast, retail finance has fallen year-on-year for eight successive quarters.
More lenders than not reported an improvement in losses due to default on unsecured lending in Q4 2010. This was the first improvement since Q1 2008. Write-offs on credit cards rose slightly to £1.2bn in Q4, but are still well below the peak of £2.1bn in Q2. Write-offs on unsecured personal loans also appear stable.
Your key questions answered
• Compare your performance in 2010 to the market as a whole.
• Help to plan your strategy by estimating market performance over the next few quarters and years.
• Understand the impact of macroeconomic and regulatory factors upon the behaviour of both lenders and borrowers.
Table of Contents
DATAMONITOR VIEW
Catalyst
Summary
ANALYSIS
Forecasts for growth in consumer credit in 2011 are subdued
Datamonitor' s forecasting model explained
Datamonitor expects gross lending to fall in 2011 before gradually recovering in subsequent years
Datamonitor has produced alternative forecasts covering best and worst case outcomes
Consumer lending staged a minor recovery in 2010
Gross consumer credit lending picked up in 2010, ending five years of decline
Fragile consumer confidence will limit demand for borrowing over the next few years
Unsecured personal loans saw year-on-year quarterly growth for the first time since 2005 in Q4 2010
The year-on-year rate of decline in balances outstanding for retail finance is accelerating
Most lines of credit performed as expected in Q4 2010
Other issues will have an impact on the consumer credit market
Losses on loans have stopped rising and are coming back under control
New legislation and regulation will affect the operation of the consumer credit market
APPENDIX
Supplementary data
Definitions
Bank of England base rate
Balances outstanding
CAGR
CCJ
Consumer credit
Gross advances
OFT
Overdraft
Methodology
Forecasting methodology
Choice of economic variables
Model outputs
Bespoke scenario-based forecasting
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
