UK Consumer Credit Market Outlook: Q3 2007 (Market Focus)

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • The consumer credit market improved slightly in Q3 2007, but lending remains weak
    • The consumer credit market continues to experience a difficult time
  • Higher interest rates and tighter lending criteria continued to affect the market in Q3 2007
    • The base rate was increased to 5.75% in July 2007 to curb inflationary pressures
    • High household debt and higher costs of borrowing have slowed the market
    • Lenders became even more conservative with regards to lending criteria as a result of the credit crunch
  • Datamonitor forecasts a difficult market through the end of 2007 and 2008
    • Datamonitor' s forecasting model explained
    • Datamonitor envisages a slightly better outlook for the rest of 2007, but a less optimistic 2008
    • Datamonitor' s forecasts continue to be affected by the flat credit card market and decline of unsecured personal loans
      • Datamonitor has analyzed two additional alternative scenarios
  • Northern Rock is awaiting bids, while some lenders have exited the personal loans market
    • The fall of Northern Rock has left a gap in the unsecured personal loans market
    • A number of lenders have left the personal loans market
    • On the regulatory side, consumers will benefit from changes to the Banking and Business Banking Codes
• 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
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: Quarterly total consumer credit gross advances and balances outstanding in the UK, Q3 2005-Q3 2007
    • Table 2: UK consumer credit gross advances by product, Q3 2005-Q3 2007 (£m)
    • Table 3: Datamonitor' s updated macroeconomic variables for 2006-11: Neutral Scenario
    • Table 4: Datamonitor' s updated neutral consumer credit forecast by product line, 2006-11 (£bn)
    • Table 5: Datamonitor' s updated Pessimistic consumer credit forecast by product line, 2006-11 (£bn)
    • Table 6: Datamonitor' s updated Optimistic consumer credit forecast by product line, 2006-11 (£bn)
    • Table 7: Datamonitor' s updated macroeconomic variables for 2006-11: Pessimistic Scenario
    • Table 8: Datamonitor' s updated macroeconomic variables for 2006-11: Optimistic Scenario
  • List of Figures
    • Figure 1: Total UK consumer credit new lending saw a slight reprieve in Q3 2007
    • Figure 2: Most UK consumer credit products continued to perform weakly in Q3 2007