Consumers' Attitudes Towards Debt - UK - July 2009

Table of Contents

• Issues in the Market
• Key issues
• Abbreviations
• Market in Brief
• New lending tails off -- finally
  • Figure 1: Outstanding lending to individuals, 1993-2008
• Despite the slowdown, most are still making ends meet...
  • Figure 2: Current financial position, April 2009
• ...but the burden of debt is starting to be felt
• More debts, more problems
• Most manage their spending pretty well
  • Figure 3: Money management skills, April 2009
• Impulsive? Or virtuous?
  • Figure 4: Financial management target groups, April 2009
• Cutting back on spending to cover the credit card bills
• Housing equity withdrawal turns negative...
• ...while credit card lending remains steady
  • Figure 5: Gross and net credit card lending, 2004-09 (not seasonally adjusted)
• Household Debt in Context
• Key points
• Have we reached the summit of the debt mountain?
  • Figure 6: Outstanding lending to individuals, 1993-2008
  • Figure 7: Growth in outstanding lending to individuals, 2003-08
• Outstanding balances start to shrink
• Borrowing races ahead of PDI
  • Figure 8: Outstanding lending to individuals as a proportion of PDI, 1993-2008
• Changing Economic Environment
• Key points
• The recession starts to hit home...
  • Figure 9: UK Gross Domestic Product, 2004-09
• ...and unemployment takes a turn for the worse
  • Figure 10: Number of unemployed people, Q1 1993-Q1 2009
• Mixed news on employment
• Low base rates limit the damage...
  • Figure 11: Bank of England base rate and three-month LIBOR, 2007-09
• ...but only help a few
• The Crunch Effect -- Continued
• Key points
• The credit crunch continues to have a huge impact
• Low interest rates moderate the remortgage issue...
• ...although rates on unsecured credit are increasing
• A spirit of prudence returns?
  • Figure 12: Changing attitudes towards money management, January 2007-December 2008
• Time to clear those debts...
  • Figure 13: Consumer financial activity, 2002-09
• ...or forced to build them up again?
• Not all have been affected
  • Figure 14: Trends in the impact of the economic downturn on consumers, December 2008-June 2009
• It' s not what you know, it' s who you know
• A degree of optimism?
  • Figure 15: Trends in consumer sentiment for the coming year, December 2008-June 2009
• Availability of finance
• The Over-Extended Consumer
• Key points
• Write-offs increase -- but don' t soar
  • Figure 16: Quarterly write-offs of lending to individuals, 2004-09
• Repossessions -- not as bad as initially feared?
• Bankruptcies hit new levels
  • Figure 17: Individual insolvencies in England and Wales, 2004-09
• Changing attitudes towards bankruptcy?
• Generation debt -- advice charities feel the strain
• The Mortgage Market
• Key points
• The mortgage market shuts down...
  • Figure 18: Gross and net mortgage lending, 2004-09 (not seasonally adjusted)
• ...and even shifts into reverse gear
• Little faith in future price rises
  • Figure 19: Expected growth in house prices, 2007-09
• Housing equity withdrawal turns negative
  • Figure 20: Housing equity withdrawal (not seasonally adjusted), 1999-2009
• The end of the property piggy bank
• Consumer Credit
• Key points
• Credit cards still mainly used as revolving credit...
  • Figure 21: Gross and net credit card lending, 2004-09 (not seasonally adjusted)
• ...but personal loan balances continue to grow
  • Figure 22: Gross and net consumer credit (excluding credit card lending), 2004-09 (not seasonally adjusted)
• Loans hit by cheap mortgage finance...
• ...and then the slowdown
• The Consumer -- Financial Situation
• Key points
• Most are still getting by...
  • Figure 23: Current financial position, April 2009
• ...but how much slack is there in household budgets?
• The less affluent are far less confident
  • Figure 24: Current financial position, by gender, age and socio-economic group, April 2009
• An easy retirement?
  • Figure 25: Current financial position, by lifestage and gross household income, April 2009
• Flying south for the winter
• The Consumer -- Credit Ownership
• Key points
• Most have some kind of outstanding credit...
  • Figure 26: Products on which respondents currently owe money, April 2009
• ...with a quarter holding multiple types
  • Figure 27: Repertoire of types of credit currently outstanding, April 2009
• Credit -- only a problem if you can' t control it?
• Borrowers feel the pinch
  • Figure 28: Current financial position, by types of credit outstanding, April 2009
• A generational shift
  • Figure 29: Outstanding credit, by gender, age and socio-economic group, April 2009
• Credit' s useful -- as long as you don' t need it
• The Consumer -- Level of Unsecured Debt
• Key points
• One in ten owe have more than £10,000 in unsecured debt
  • Figure 30: Money owed on unsecured debts, April 2009
• Struggling at the margins
  • Figure 31: Current financial position, by money owed on unsecured debts, April 2009
• Borrowing their way into trouble
  • Figure 32: Money owed on unsecured debts, by demographics, April 2009
• More strain on the family budget
  • Figure 33: Money owed on unsecured debts, by demographics, April 2009
• The Consumer -- Level of Secured Debt
• Key points
• High mortgages are the exception, not the norm
  • Figure 34: Money owed on secured/mortgage-related debts, April 2009
  • Figure 35: Current financial position, by money owed on secured/mortgage-related debts, April 2009
• The cost of climbing the ladder
  • Figure 36: Money owed on secured/mortgage-related debts, by demographics, April 2009
• The Consumer -- Borrowing, Saving and Managing Money
• Key points
• Paragons of financial virtue?
  • Figure 37: Money management skills, April 2009
• Reaping the rewards of responsible budgeting...
  • Figure 38: Current financial position, by positive attitudes towards money management skills, April 2009
• ...and the financial implications of a lack of organisation
  • Figure 39: Current financial situation, by negative attitudes towards money management skills, April 2009
• The ' denial' approach to managing debt
• Mortgage holders -- managing their responsibilities?
  • Figure 40: Money management skills, by money currently owed, April 2009
• The polarisation of consumer credit
• Experience, or a generational shift?
• The student loan generation
• Affluent enough to take a few risks?
• The Consumer -- Attitudes and Expectations
• Key points
• Time to cut back borrowing?
  • Figure 41: Impact of the slowdown, April 2009
• Credit rationing -- only a problem for a minority
• The view from the ivory tower
  • Figure 42: Impact of the slowdown, by current financial position, April 2009
• The stretched are concentrating on clearing debts
• A third of mortgage holders are feeling the benefit
  • Figure 43: Impact of the slowdown, by money currently owed, April 2009
• Reality hits for the over-extended?
  • Figure 44: Impact of the slowdown, by money owed on unsecured debts, April 2009
• The Consumer -- Segmenting the Population
• Key points
• Most manage their finances with only the occasional glitch
  • Figure 45: Financial management target groups, April 2009
  • Figure 46: Attitudes towards financial management, by financial management target groups, April 2009
• Young and carefree
  • Figure 47: Financial management target groups, by gender, age, socio-economic group and lifestage, April 2009
• Is virtue its own reward?
  • Figure 48: Current financial position, by financial management target groups, April 2009
• Banks reducing options for the Impulsive?
  • Figure 49: Impact of the slowdown, by financial management target groups, April 2009
• Anything for an easy life
  • Figure 50: The slowdown segmentation, April 2009
  • Figure 51: Attitudes towards the slowdown, by the slowdown segmentation, April 2009
• Dreaming of a return to traditional banking values
  • Figure 52: The slowdown segmentation, by gender, age, socio-economic group and lifestage, April 2009
• Appendix -- The Consumer -- Financial Situation
  • Figure 53: Current financial position, by demographics, April 2009
• Appendix -- The Consumer -- Credit Ownership
  • Figure 54: Repertoire of money currently owed, by money currently owed, April 2009
  • Figure 55: Most popular money currently owed, by demographics, April 2009
  • Figure 56: Next most popular money currently owed, by demographics, April 2009 (continued)
• Appendix -- The Consumer -- Level of Debt
  • Figure 57: Money owed on unsecured debts, by demographics, April 2009
  • Figure 58: Most popular money owed on secured/mortgage-related debts, by demographics, April 2009
  • Figure 59: Next most popular money owed on secured/mortgage-related debts, by demographics, April 2009 (continued)
• Appendix -- The Consumer -- Borrowing, Saving and Managing Money
  • Figure 60: Most popular money management skills, by demographics, April 2009
  • Figure 61: Next most popular money management skills, by demographics, April 2009 (continued)
  • Figure 62: Most popular money management skills, by money currently owed, April 2009
  • Figure 63: Next most popular money management skills, by money currently owed, April 2009 (continued)
• Appendix -- The Consumer -- Attitudes and Expectations
  • Figure 64: Most popular impact of the slowdown, by demographics, April 2009
  • Figure 65: Next most popular impact of the slowdown, by demographics, April 2009 (continued)
• Appendix -- The Consumer -- Segmenting the Market
  • Figure 66: Money management target groups, by demographics, April 2009
  • Figure 67: Slowdown segments, by demographics, April 2009