Unsecured debt in the UK has risen by more than £1,000 per head over the past five years, according to independent market analyst Datamonitor. Borrowing via credit cards, motor and retail finance deals, overdrafts and personal loans now averages £3,383 per person, compared with just £2,231 in 1998.
Credit card borrowing has risen at the fastest rate, more than doubling since 1998 while the average personal loan burden has risen 52 per cent from £1,024 to £1,561. After several years of buoyancy, there is now concern about the strength of the economy and in turn the state of the personal loan market. Even a mild downturn will affect many consumers and consequently their loan providers.
The growth rate of balances outstanding has climbed from 14.1 per cent in 1997 to 18.8 per cent in 2002; that for gross advances from 8.8 per cent in 1997 to 10.9 per cent in 2002. Balances outstanding on credit cards grew by more than 100% between 1998 and 2002, compared to a growth rate of just over 50% for unsecured personal loans. Overdrafts and motor finance have also been growing fast whilst in relative terms retail finance is falling out of favour.
Table 1: Consumer credit balances outstanding per adult by product, 1998 and 2002 (in £)
1998 | 2002 | % change 1998-2002 | |
Credit cards | 507 | 1,062 | +109.5 |
Motor finance | 334 | 392 | +17.4 |
Retail finance | 255 | 213 | -16.5 |
Overdrafts | 111 | 156 | +40.5 |
Unsecured personal loans | 1,024 | 1,561 | +52.4 |
Consumer credit total | 2,231 | 3,383 | +51.6 |
All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
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