Product Type: Market Research Report
Published by: Mintel International Group Ltd.
Published: April 2008
Product Code: R560-3255Description The personal loans market has enjoyed a period of sustained and fairly rapid growth driven by the availability of credit and low interest rates. However, many analysts believe that, with interest rates rising throughout 2007 and the effects of the global ‘credit crunch’ now being felt in both Republic of Ireland (RoI) and Northern Ireland (NI) economies, this period of cheap and abundantly available credit is over. Indeed, such is the lack of liquidity in the money markets, the decision by both the Bank of England and the European Central Bank to reduce interest rates in late 2007 and early 2008 may have limited impact in spurring growth in the personal loans market.
Key themes of the report:- The imminent economic slowdown will hit demand for financial products and tighten lending criteria.
- Technology, particularly the Internet, is set to play an ever greater role in the provision of personal loans.
- Governments and consumers are calling for greater transparency and fairness in the consumer credit market.
- Seniors is an underdeveloped market: as younger consumers feel the pinch, could older people be better positioned to borrow money?
- Marketing to new arrivals. Young new immigrants arriving in both NI and RoI are looking for loans to set up home and start businesses. Are they being adequately catered for?
Table of Contents - ISSUES IN THE MARKET
- Key themes of the report
- Definition
- Unsecured Loans
- ABBREVIATIONS
- MARKET IN BRIEF
- Previous market growth is now slowing considerably
- Interest rates affecting payments
- US sub-prime market fallout effects still to be seen
- Competing forms of credit
- Use of technology
- Responsible lending
- Consumer confidence shaky
- INTERNAL MARKET ENVIRONMENT
- Key points
- Underlying debt culture
- Are Irish consumers now more willing to get into debt?
- Are Irish consumers concerned about their debt? Don’t count on it!
- World economic situation uncertain for 2008
- Lenders becoming more risk averse
- Figure 1: Loan acceptance rates, April-Oct 2007
- Responsible lending
- Egg credit move
- Unsecured lenders reducing risk
- Sub-prime personal loans
- Bad debt to blame
- Figure 2: Sub-prime losses for from exposure to bad debt, global
- US sub-prime exposure in RoI
- What caused the credit crunch?
- How long will this last?
- Lending criteria tightening in RoI
- Competition - Lack of competition in the NI banking market
- NI banking scandal
- RoI
- Legislation
- IVA alternative to bankruptcy
- Northern Rock rejects IVA
- Figure 3: The number of UK population expected to go insolvent, 2007 and 2008
- Protecting the consumer
- Irish Financial Services Regulatory Authority (RoI)
- Financial Services Authority (NI)
- Getting feedback - regulating the market
- Consolidating existing debts
- Payment breaks
- Personal loans market under fire from the media
- Loan APR at 2.6 million percent
- Unsuitable television ads
- BROADER MARKET ENVIRONMENT
- Key points
- GENERAL ECONOMIC PERFORMANCE
- Republic of Ireland
- Economic growth
- Employment
- Inflation
- Figure 4: The economic outlook for the Republic of Ireland, 2006-08
- Figure 5: The economic outlook for NI, 2006-08
- Northern Ireland
- Economic growth
- Employment
- Inflation
- Tough times ahead for 2008
- Interest rates affecting the personal loan market
- Falling interest rates
- Figure 6: UK and EuroZone interest rates, March 2002-February 2008
- Borrowing becoming more expensive
- APR rates for personal loans
- Figure 7: Unsecured personal loans APR for selected banks, NI, March 2008
- Figure 8: Secured personal loans APR for selected banks, NI, March 2008
- Figure 9: Comparison of variable APR, RoI, March 2008
- Figure 10: Comparison of fixed APR, RoI, March 2008
- RoI banks enjoy generous margins on personal loan rates
- PPI under scrutiny FSA and IFSRA
- World cash injection
- ECB lends €348 billion to lower rates
- Credit crisis hitting the banks
- Influence of the downturn in the property market
- NI house prices ‘hit brick wall’
- RoI house price fall
- Younger and older have less access to credit facilities
- Figure 11: Number of credit facilities, 2006
- Aging population - effects on the market
- NI
- Figure 12: Population change by age group, NI, 2000-20
- RoI
- Figure 13: Population change by age group, RoI, 2000-20
- Lending to the New Irish
- RoI - over one tenth of the population non-nationals
- Figure 14: Number of people coming to live in RoI, by country of last residence, 2006
- RoI banks seek to attract non-national customers
- Immigrants fuel NI population growth
- Figure 15: Number of people coming to live in Northern Ireland, by country of last residence (mid-2004 to mid-2005)
- MARKET VALUE AND FORECAST
- Key points
- The RoI unsecured loan market continues to grow in 2007
- Figure 16: Unsecured loans market value all-Ireland, RoI and NI, 2003-07
- Figure 17: Index growth estimates, all-Ireland, NI and RoI, 2003-07
- Future outlook
- SEGMENTATION PERFORMANCE
- Key points
- UNSECURED LOANS SEGMENTATION
- Personal loans - beginning of tough times
- Figure 18: Personal loans market, NI and RoI, 2003-07
- Falling demand for credit cards in NI
- Figure 19: Credit cards market, NI and RoI, 2003-07
- Source: BoE/Irish Central Bank/Mintel (Taken from Mintel’s report, Credit Cards-A Nation in Debt, August 2007)
- Other types of unsecured lending detract from personal loans market
- Figure 20: Other unsecured lending, NI and RoI, 2003-07
- COMPANIES AND PRODUCTS
- Key points
- Personal loan lender profiles
- Figure 21: Profiled personal loan lenders, 2008
- Abbey National
- Figure 22: Abbey National’s fixed rate personal loans
- Alliance and Leicester
- Figure 23: Alliance and Leicester fixed rate personal loans
- Figure 24: Alliance and Leicester information on loans of value £7,500
- Allied Irish Bank Plc Ireland
- Figure 25: Personal loan rates, March 2008
- Bank of Ireland
- Figure 26: Personal and holiday loans fixed rates, Bank of Ireland RoI, March 2008
- Figure 27: Personal/motor/holiday loan variable APR's, Bank of Ireland RoI, March 2008
- Figure 28: Personal and holiday loans fixed rates, Bank of Ireland NI, March 2008
- The Co-operative Bank
- Unsecured personal loan
- Figure 29: Fixed rate unsecured personal loan rates, Feb 2008
- Egg Banking PLC
- Figure 30: Egg unsecured loan details
- First Active
- Figure 31: Fixed monthly repayments
- First Trust
- Figure 32: Features of the First Trust Bank (NI) fixed personal loan
- Halifax (RoI)
- Figure 33: Halifax personal loans APR
- National Irish Bank (NIB) and Northern Bank
- NIB
- Figure 34: Fixed rate personal loans APR, NIB
- Figure 35: Variable rate personal loans APR
- Northern Bank
- Fixed rate personal loan
- Figure 36: Northern Bank fixed rate personal loan APR rates
- Permanent TSB
- Figure 37: Permanent TSB fixed rate loans
- Ulster Bank
- Figure 38: Ulster bank fixed rate unsecured personal loan characteristics, Feb 2008
- Supermarket finance
- Figure 39: Tesco Personal Finance, fixed rate loan, RoI
- Figure 40: Marks & Spencer Money, NI
- Figure 41: Tesco Personal Finance, fixed rate loan, NI
- Credit unions
- PERSONAL LOAN COMPARISON WEBSITES
- NI
- Figure 42: UK financial price comparison sites market share, 2007
- Moneysupermarket.com
- Click Compare
- U Switch
- RoI
- Itsyourmoney.ie
- Moneyfish.ie
- CHANNELS TO MARKET
- Key points
- Face-to-face contact still important at branches
- Telephone and Internet banking usage increasing steadily
- Figure 43: Internet usage, NI and RoI, 2001-07
- Figure 44: Internet banking activities in the last three months RoI, 2005 and 2006
- Personal loan comparison sites usage up
- Figure 45: The number of visitors to comparison site moneysupermarket, NI, 2006-07
- NI banks behind when it comes to marketing to ‘new Irish’
- CONSUMER SPENDING PRIORITIES
- Key points
- Credit priorities
- Figure 46: What credit has been spent on in the past 12 months, NI and RoI, 2005-07
- NI consumers focused on the home, while RoI gets mobile
- Figure 47: What credit has been spent on in the past 12 months, by gender, NI and RoI, 2007
- Figure 48: What credit has been spent on in past 12 months, NI, 2007
- Figure 49: What credit has been spent on in past 12 months, RoI, 2007
- CONSUMER PREFERENCES AMONG CREDIT FACILITIES
- Key points
- Types of credit facility
- Figure 50: Credit facilities used in last 12 months, NI and RoI, 2002-07
- Overdrafts and credit cards are the key competitors
- Catalogue purchasing has halved
- Credit Union more than double penetration in RoI
- Figure 51: Credit union usage, NI and RoI, 2002-07
- Food and finance: an unlikely combination
- Figure 52: Agree with statement, supermarkets and retailers should not get involved in personal finance, NI and RoI, 2002-07
- Resistance to supermarkets and retailers dealing in personal finance
- APPENDIX
- Figure 53: Credit facilities, NI and RoI, 2007
- ATTITUDES TO FINANCE
- Figure 54: Attitudes to finance, NI, 2002-07
- Figure 55: Attitudes to finance, RoI, 2002-07
- NI DEMOGRAPHICS
- Figure 56: Attitudes to finance, by demographic split, NI, 2007
- Figure 57: Attitudes to finance, by demographic split, NI, 2007
- Figure 58: Attitudes to finance, by demographic split, NI, 2007
- RoI demographics
- Figure 59: Attitudes to finance, by demographic split, RoI, 2007
- Figure 60: Attitudes to finance, by demographic split, RoI, 2007
- Figure 61: Attitudes to finance, by demographic split, RoI, 2007
- Figure 62: Attitudes to finance, by demographic split, RoI, 2007
- Consumer typologies
- Figure 63: Consumer typologies, by demographic split, RoI, 2007
- Figure 64: Consumer typologies, by demographic split, NI, 2007
- Broader Market Environment
- Figure 65: Annual increase by property type, NI, 2007
- Figure 66: Value of mortgages, RoI
- Figure 67: Market segmentation by personal loan amount NI, 2006
- Figure 68: Alliance and Leicester financial performance, 2006
- Figure 69: Co-operative bank profit before tax, 28 weeks to July 2006/07
- APPENDIX: RESEARCH METHODOLOGY
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