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News for Members

18 November 2016

UK Consumer Credit Outlook - Britons’ Borrowing Enters Unchartered Territory

PwC has published its ninth annual survey of the UK's unsecured lending landscape this month. Here's some of the key findings from the report:

• Unsecured debt has reached an all-time high in the UK,standing at £10,000 per household

• Favourable macro-economic conditions have underpinned strong lending growth

• The PwC Credit Confidence Survey shows credit confidence at an all-time high

• Brexit has not adversely affected overall credit confidence,but some segments are concerned

• Traditional forms of lending are proving resilient

• In the short to medium term, new market participants are more likely to complement rather than compete with established players

• The debt to income ratio is set to exceed the pre-crisis peak by around 2020

• Structural changes will squeeze household balance sheets and affordability in the medium to longer term

• Unsecured lending continues to deliver strong credit spreads

• Levels of bad debt have fallen back to levels not seen since the 1990s

• Relative to other banking products, unsecured lending is delivering strong returns

• Proposed Basel reforms are likely to erode returns, particularly from lower risk customers

• Customers in middle risk bands (‘near-prime’) are likely to provide the most attractive returns

• There are 10-14m people (c.25% of the market) who exhibit near-prime characteristics

• Despite the size and attractiveness of the near-prime segment, it is currently relatively underserved

To view the full report, visit the PwC website

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