Table of Contents
- CATALYST
- SUMMARY
- ANALYSIS
- The consumer credit market delivered a poor performance in 2006
- Advances dropped once again, though balances grew by a small degree
- A number of factors can be attributed to the consumer credit market' s
poor performance
- Despite a well performing UK economy in 2006, the consumer credit
market did not follow suit
- Successive base rate rises had a slowing effect on borrowing over
2006
- Despite full employment, unemployment increased slightly over 2006,
contributing to the consumer credit market' s contraction
- Though the housing market outperformed expectations in 2006, the
consumer credit market still faltered
- Further analysis highlighted that most individual product lines
performed badly over 2006
- In terms of balances outstanding, most products contracted except for
retail finance and personal loans
- Fluctuations in the share of the total consumer credit market show
personal loans to have gained significantly
- In terms of gross advances, all consumer credit products contracted
except for overdrafts
- Fluctuations in performance saw credit cards and overdrafts gain
more share of the total consumer credit market
- Meanwhile, point of sale finance continued to struggle
- Motor finance had another poor year in 2006
- Retail finance also had another poor year in 2006
- What' s next for the consumer credit market?
- forecasting model assesses the relationship of macroeconomic factors
with respect to consumer credit products
- Under the neutral view, new lending in the consumer credit market
falls in 2007 and picks up thereafter
- The consumer credit market will reach £229.4 billion in 2011
- In terms of individual product lines, virtually all products will
suffer in 2007 but will pick up thereafter
- Under a pessimistic view of the economy, the consumer credit market
will contract significantly in 2007 before picking up again in 2008
- The consumer credit market will dip to a low of £199.8 billion in
2007 under a pessimistic scenario
- In terms of individual product lines, retail and motor finance both
continue their decline, with overdrafts performing best of all
- Under an optimistic view of the economy, the consumer credit market
will begin prospering again
- The consumer credit market will expand at an annual average rate of
3.0 per cent to reach £238.1 billion in 2011
- In terms of individual product lines, retail finance will be the
only underperforming product
- APPENDIX
- Supplementary data
- Methodology
- Forecasting methodology
- Choice of economic variables
- Model outputs
- Bespoke scenario based forecasting
- Definitions
- General definitions
- Bank of England base rate
- Balances outstanding
- CAGR
- Consumer credit
- Gross advances
- Overdraft
- Definitions of point of sale motor and retail finance products
- Motor finance products available at the point of sale
- Retail finance products available at the point of sale
- Further reading
- European consumer credit reports
- UK consumer credit reports
- UK consumer credit briefings
- Forthcoming consumer credit briefings
- Relevant links
- Ask the analyst
- Disclaimer
- List of Tables
- Table 1: Balances outstanding and gross advances in the consumer
credit market, 2002-2006
- Table 2: Consumer credit balances outstanding by product, 2002-2006
- Table 3: Market share of consumer credit balances outstanding by
product line, 2002-2006
- Table 4: Consumer credit gross advances split by product, 2002-2006
- Table 5: Market share of gross advances in the consumer credit market
by product line, 2002-2006
- Table 6: New and used car POS motor finance balances outstanding,
2002-2006
- Table 7: New and used car POS motor finance gross advances, 2002-2006
- Table 8: New car finance gross advances by product line, 2002-2006
- Table 9: Used car finance gross advances by product line, 2002-2006
- Table 10: Retail finance balances outstanding by product line,
2002-2006
- Table 11: Retail finance gross advances by product line, 2002-2006
- Table 12: Forecast performance of the consumer credit market drivers
under the neutral scenario, 2005-2011f
- Table 13: Consumer credit forecasts under a neutral view of the
economy, 2006-2011f
- Table 14: Forecast performance of the consumer credit market drivers
under the pessimistic scenario, 2005-2011f
- Table 15: Consumer credit forecasts under a pessimistic view of the
economy, 2006-2011f
- Table 16: Forecast performance of the consumer credit market drivers
under the optimistic scenario, 2005-2011f
- Table 17: Consumer credit forecasts under an optimistic view of the
economy, 2006-2011f
- Table 18: 12 month year-on-year change in UK house prices, January
2002-December 2006
- List of Figures
- Figure 1: Advances dropped by 4.5 per cent in 2006, though balances
grew by a small amount, 2002-2006
- Figure 2: Consumer confidence continued to fall through 2006, May 2004
-December 2006
- Figure 3: The housing market performed significantly above
expectations in 2006, January 2002-December 2006
- Figure 4: Unsecured personal loans experienced the strongest growth
over the last five years, 2002-2006
- Figure 5: Unsecured personal loans have gained an extra share of 6.8
per cent in the last five years while credit cards, motor and retail
finance have all lost share, 2002-2006
- Figure 6: Except for overdrafts, new lending on all consumer credit
products suffered from a poor performance in 2006, 2002-2006
- Figure 7: Credit cards and overdrafts have gained share while
unsecured personal loans have lost share, 2002-2006
- Figure 8: The share of used car finance within the motor finance
market declined slightly in 2006, 2002-2006
- Figure 9: Gross lending in both the new and used car finance markets
declined in 2006, 2002-2006
- Figure 10: Reversing the trend somewhat, two of three retail finance
product lines saw growth in balances outstanding over 2006, 2002-2006
- Figure 11: Gross advances for all product lines within retail finance
have followed a downward trend since 2004, 2002-2006
- Figure 12: The consumer credit market will steadily increase and reach
£229.4 billion in 2011f, 2006-2011f
- Figure 13: Under the pessimistic scenario, the consumer credit market
will drop to a low of £199.8 billion in gross advances in 2007, 2006-2011f
- Figure 14: Under an optimistic view of the economy, the consumer
credit market will grow very strongly over the next five years, 2006-2011f
- Figure 15: Point of sale product aggregations used within this briefing
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