UK Consumer Credit Market Outlook: Q1 2009
Datamonitor, June 2009, Pages: 19
The consumer credit market performed poorly in the first quarter of 2009 as the credit crunch continued to affect the confidence of borrowers and lenders. This latest edition of The quarterly outlook series discusses recent developments in the consumer credit market and provides the latest forecasts for the period 2009-2013.
Scope
- Provides the latest market sizing figures for the UK consumer credit market.
- Covers an array of consumer credit lines - unsecured personal loans, credit cards, overdrafts, retail finance and motor finance.
- Considers the latest developments in the UK economy in order to build up three forecast scenarios for the next four years.
- Includes an accompanying interactive Excel model.
Highlights of this title
After more than two years of increases in the magnitude of year-on-year falls, unsecured personal loans saw a noticeable uplift in the first quarter which translated into a smaller year-on-year decline as gross advances increased by 14.6% compared to Q4 2008.
Motor finance gross advances saw the largest quarterly improvement between Q1 2009 and Q4 2008. Unsecured personal loans also grew whereas overdrafts, credit cards and retail finance gross advances all dropped in Q1 2009. The largest decline was seen in retail finance.
Datamonitor research shows that consumer attitudes to their finances are adapting to the new conditions, with a large percentage saying that from now on they intend to cut back significantly on their use of credit and save more in the future.
Key reasons to purchase this title
- Review market performance in Q1 2009 to place your own performance in context with the overall market.
- Use The market forecasts to plan your future strategy with confidence.
- Understand how the ongoing liquidity crisis has affected lenders and the overall economy.
DATAMONITOR VIEW
CATALYST
SUMMARY
ANALYSIS
The reduction in consumer credit slowed in the first quarter of 2009
The consumer credit market declined for the fifth consecutive period in Q1 2009
The rate of decline seen across unsecured personal loans and motor finance slowed in Q1 2009
Despite drastic moves by the Bank of England, lenders and borrowers are shying away from credit products
The Bank of England has moved towards a policy of quantitative easing
Lenders continue to pursue conservative strategies as the prevailing economic conditions remain difficult
Consumers are becoming more aware of the need to organize their finances
Datamonitor expects conditions to remain tough during 2009 before improving in 2010
Datamonitors forecasting model explained
Further falls in GDP and soaring unemployment show that the UK economy remains in turmoil
Falling inflation has allowed the bank to maintain an historically low base rate
Retail sales dropped but new car and used car registrations grew in the first quarter
There were further reductions in house prices
Under the Datamonitor scenario, all credit products will have a difficult 2009
Datamonitor has also considered two additional scenarios
Under the pessimistic scenario, there will be a longer contraction in the economy
Under the optimistic scenario, the recovery will come sooner and be more pronounced
The government is introducing new measures to regulate the consumer credit market
The government is looking to prevent the unsolicited raising of credit card limits
The OFT is conducting a review on the fairness of competition in the consumer credit market
Consumers are turning to loan sharks in desperation as the credit crunch continues to bite
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
List of Tables
Table 1: Quarterly total consumer credit gross advances and balances outstanding in the UK, Q1 2007 to Q1 2009
Table 2: UK consumer credit gross advances by product, Q1 2007 to Q1 2009 (£m)
Table 3: Datamonitors updated macroeconomic variables for 2008-13: Datamonitor scenario
Table 4: Updated Datamonitor view consumer credit forecast by product line, 2008-13 (£ billion)
Table 5: Datamonitors updated pessimistic consumer credit forecast by product line, 2008-13 (£ billion)
Table 6: Datamonitors updated optimistic consumer credit forecast by product line, 2008-13 (£ billion)
Table 7: UK consumer credit balances outstanding by product, Q1 2007 to Q1 2009 (£m)
Table 8: Datamonitors updated macroeconomic variables for 2008-13: pessimistic scenario
Table 9: Datamonitors updated macroeconomic variables for 2008-13: optimistic scenario
List of Figures
Figure 1: Both gross advances and balances outstanding continued to decline on a year-on-year basis
Figure 2: All products experienced negative year-on-year growth in Q1 2009
Figure 3: The rate of interest paid for a loan of £5,000 grew by 44% over two years
Figure 4: The majority of respondents said they plan to save more in the future
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