Consumer lending continues to grow in 2022, with both consumer credit and mortgages/housing recording positive performances. Despite surging inflation and the cost-of-living crisis squeezing household finances, consumers are still able and willing to take out loans.
As inflation stands at record high levels, the Bank of England has been frequently revising its base rate in an attempt to control inflation. Since December 2021, it has increased from 0.
Mortgage/housing continues to increase in the UK in 2022, both in terms of gross lending and outstanding balance. During the pandemic, consumers spent more time at home, and therefore, many reconsidered their living arrangements and decided to move out from smaller flats in city centres to larger properties in suburban areas.
Buy Now, Pay Later (BNPL), the payment model that enables interest-free instalment payments, continues to disrupt consumer lending in the UK. The value of BNPL has registered skyrocketing growth in previous years, and in 2022, it is estimated to be worth more than eight times what it registered in 2019.
The current economic environment, in particular the cost-of-living crisis and rising inflation, is expected to leave a mark on the future of consumer lending in the UK. A continuous increase in interest rates in the coming years, with the Bank of England base rate projected to exceed 4% in 2023, will negatively influence the willingness and ability to borrow.
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Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.See All of Our Definitions
This report originates from Passport, our Consumer Lending research and analysis database.
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