16 September 2005
Demand for personal loans and credit cards has tailed off in the UK this year, a new report indicates.
The report predicts that demand for secured loans will dip over the next five years, as the UK property market continues to slow down and the country is not likely to see the double digit growth in secured lending of recent years repeated in the near future.
Analyst Datamonitor found that poor retail sales and waning consumer confidence in the British housing market has filtered through to the lending sector, with a particularly marked slowdown in credit card spending.
The secured loans market boomed by as much as 50 per cent a year over the past five years, but Datamonitor forecasts growth of just 5.3 per cent a year between 2005 and 2009, with the market reaching £35.4 billion a year. Total advances reached £32.6 billion in 2004, considerably higher than the previous year's £28.1 billion.
The report's author Maya Imberg said: "As the UK's housing market slows to a soft landing, the rapid growth rates the secured lending market has enjoyed over the last five years are set to cool."
The Datamonitor research also found that mainstream lenders had become increasingly involved in the secured loans market and advised the industry to overhaul the image of secured lending, presenting it as an options for all types of homeowner, rather than just those struggling with debt. Interest rates tend to be higher on secured personal loans, but much larger sums of money are usually available.
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