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UK Non-standard and Sub-Prime Lending 2005: Update ReportProduct Type: Market Research ReportPublished by: Datamonitor Published: November 2005 Product Code: R313-13457 Description IntroductionAfter over a decade of uninterrupted growth, the retail lending market has finally slowed in 2005. Off the back of a weak housing market, mortgage lending is contracting while the consumer credit market is sluggish. But how has this affected non-standard and sub-prime lenders? This update report details the latest market and competitor trends in this niche market to answer this question. Scope Provides a detailed overview of the non-standard and sub-prime mortgage and consumer credit markets. Examines a range of product markets; including the sub-prime mortgage, home collected credit, credit card and motor finance markets. Analyses the latest market trends, competitor happenings and regulatory developments in the non-standard and sub-prime lending market in 2005. Provides a six month update to our annually produced non-standard lending report, to keep lenders abreast of the latest events shaping their market. Highlights In recent years the UK economy has experienced a period of relatively strong and uninterrupted growth. GDP has performed above expectations and low base rates have stimulated borrowing and consumption. Yet, marginally over nine million people one quarter of the UK adult population will still struggle to borrow from a mainstream lender. After over a decade in decline, the non-standard population will creep upwards in 2005 as the economic situation worsens and more people struggle with debt commitments. Unemployment figures are up in 2005, arrears and repossession are marginally higher, CCJs have increased considerably and personal insolvencies continue to expand at alarming rates. Despite a notable decline in mortgage lending in this year, a number of the leading non-standard mortgage lenders have continued to grow at impressive rates. However, others look less likely to carry over their strong performance last year into 2005, largely due to more conservative strategies being imposed by their parent organization Reasons to Purchase Find out about the economic, regulatory, socio-demographic and competitive issues facing your market to identify opportunities and threats. Enhance your position in the market by identifying future product trends and competitive developments. Identify and evaluate macroeconomic drivers that affect the non-standard population in the UK. Table of Contents TABLE OF CONTENTSCHAPTER 1 INTRODUCTION 7 What is this report about? 7 Who is the target reader? 8 How do you use this report 8 CHAPTER 2 OVERVIEW OF THE NON-STANDARD LENDING MARKET IN 2005 10 Introduction 10 Defining the non-standard population 10 Subjectivity is a necessary evil 11 Alternative commonly used terms 12 Sub-prime is a segment of non-standard 13 The economy has weakened in 2005, exerting an upwards pressure on the non-standard population 14 GDP growth expectations down considerably in 2005 15 A slight increase in the claimant count 15 Base rates cut to 4.5 per cent following five successive increments in 2003/4 16 The number of people struggling with debt commitments has increased in 2005 17 Mortgage arrears and repossession slightly up 17 Bankruptcies continue to rise rapidly in 2005 19 After declining for well over a decade, in 2005 we have seen the most significant increase in CCJs since the last recession 20 The half year reporting season provided us with further evidence that debt levels are starting to become unmanageable 22 A number of social drivers contribute to the size of the non-standard population 24 Basic bank accounts continue to grow 24 Self-employment on the rise in 2005 25 Income support claimants down marginally in 2005 27 Conclusions 27 CHAPTER 3 THE NON-STANDARD AND SUB-PRIME MORTGAGE MARKET IN 2005 29 Introduction 29 Secured lending slumps in 2005 as the housing market stalls 29 New mortgage lending suffered a correction of 13.1 per cent in the first half of 2005 29 House prices appear to have stabilized 32 More first-time buyers are likely to enter the market in the latter half of 2005 33 For more information… 33 While some non-standard mortgage lenders have performed well in 2005, others have suffered as the market slows 34 Non-standard mortgage specialists outperformed the mainstream market in 2004 34 Unsurprisingly, non-standard mortgage lenders have reported mixed results in 2005 36 Competitor developments in 2005 39 Regulatory rumblings 39 New product launches 46 CHAPTER 4 THE NON-STANDARD AND SUB-PRIME CONSUMER CREDIT MARKET IN 2005 49 Introduction 49 The consumer credit market has struggled in 2005 49 The consumer credit market is struggling to replicate 2004 perfomance 50 Weak credit card figures blight the performance of consumer credit in H1 2005 51 The credit card market will be hard pushed to recover lost ground in the latter half of 2005 53 Due to sluggish 2005 volumes and a slightly more pessimistic outlook, Datamonitor has lowered its five-year forecasts 55 The sub-prime consumer credit market is struggling in 2005 59 The home credit market continues to struggle in 2005 as providers concentrate on growing their direct unsecured personal loan books 60 A torrid time for some in the sub-prime motor finance market 64 Sub-prime credit cards continue to grow strongly despite a slowdown in the mainstream credit card market 70 Competitor developments in 2005 72 Regulatory rumblings 72 New product launches 81 Entries, exits and acquisitions 86 CHAPTER 5 APPENDIX 90 Supplementary data 91 Definitions 98 Future readings 102 Relevant links 102 Datamonitor’s custom research capabilities 103 The Retail Banking team 105 |
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