Abstract
Overview
Introduction
The poor performance of the UK consumer credit market in 2005 and 2006 continued into Q1 2007, as the market continued to be affected by a weaker labor market, high household debt and low consumer confidence. What can lenders expect over the next few years?
Scope
- Provides the latest marking sizing figures for the UK consumer credit market by product line and analyses industry trends in Q1 2007.
- Covers unsecured personal loans, credit cards, motor finance, retail finance (store cards, installment credit and mail order credit) and overdrafts.
- Details Datamonitor' s latest scenario based forecasts for the future of the consumer credit market in an accompanying interactive Excel model.
Report Highlights
The poor performance of the consumer credit market in 2005 and 2006 carried into Q1 2007, as consumers continued to be affected by a weaker labor market, high household debt and low consumer confidence.
High household debt and higher interest rates have slowed down spending, along with lenders maintaining their tightened lending criteria.
Datamonitor' s forecasts for the UK consumer credit market have changed only very slightly from the previous quarter. Most product lines will continue to perform poorly over the next two years in particular.
Reasons to Purchase
- Review market performance in Q1 2007 to place your performance in context to the market' s.
- View the latest independent quarterly and annual forecasts for the UK consumer credit market to plan your future strategy with confidence.
- Understand the key challenges facing lenders in 2007 and the impact they are having on the market.
Table of Contents
- DATAMONITOR VIEW
- CATALYST
- SUMMARY
- ANALYSIS
- Q1 2007 data shows that the UK consumer credit market continues to
struggle
- Following a poor performance in 2006, the consumer credit market continued to underperform in Q1 2007
- Most product lines continued to struggle in the first quarter of 2007
- Higher interest rates and tight lending criteria adversely impacted on
the market in Q1 2007
- The base rate was increased further in 2007 to curb Inflationary
pressures
- High household debt and higher costs of borrowing have slowed the market
- Lenders remain conservative with regards to lending criteria
- The base rate was increased further in 2007 to curb Inflationary
pressures
- Datamonitor forecasts a difficult market ahead, particularly in 2007
- Datamonitor' s forecasting model explained
- Datamonitor' s macroeconomic forecasts have remained broadly stable
- Under a marginally improved economic view, Datamonitor has adjusted
its consumer credit forecasts slightly
- Datamonitor has analyzed two additional alternative scenarios
- A number of competitor and regulatory activities took place in Q1 2007
- Citigroup has acquired Egg, but it is a risky move considering the bank' s losses in recent years
- Lloyds TSB and Barclaycard introduced fees for dormant credit card
accounts
- Such fees will become more common as lenders look to reduce costs from unprofitable customers
- The Competition Commission published its final report on the current
account market in Northern Ireland
- In its investigation, the CC found a number of significant issues with overdrafts
- The CC' s proposed remedies are likely to reduce lenders' income from overdrafts
- Q1 2007 data shows that the UK consumer credit market continues to
struggle
- APPENDIX
- Supplementary data
- Definitions
- Bank of England base rate
- Balances outstanding
- CAGR
- CCJ
- Consumer credit
- Gross advances
- IVAs (Individual Voluntary Arrangements)
- 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, Q1 2004-Q1 2007
- Table 2: Consumer credit gross advances by product, Q1 2005-Q1 2007
- Table 3: Datamonitor' s updated macroeconomic variables for 2006-2011f: neutral scenario
- Table 4: Datamonitor' s updated neutral consumer credit forecast by product line, 2006-2011f
- Table 5: Datamonitor' s updated pessimistic consumer credit forecast by product line, 2006-2011f
- Table 6: Datamonitor' s updated optimistic consumer credit forecast by product line, 2006-2011f
- Table 7: Consumer credit gross advances year-on-year growth by product line, Q1 2005-Q1 2007
- Table 8: Quarterly new car registrations and year-on-year growth, Q1 2003-Q1 2007
- Table 9: Datamonitor' s updated macroeconomic variables for 2006-2011f: pessimistic scenario
- Table 10: Datamonitor' s updated macroeconomic variables for 2006-2011f: optimistic scenario
- List of Figures
- Figure 1: Total consumer credit new lending continued its decline in Q1 2007, Q1 2004-Q1 2007
- Figure 2: Except for overdrafts, most product lines continued to struggle in Q1 2007, Q1 2005-Q1 2007
- Figure 3: The new car sales market improved in Q1 2007, Q1 2003-Q1 2007
