25 May 2007
A slowdown in the UK's consumer credit market is likely to cause lenders to lower their interest rates on personal loans, a Datamonitor report has forecast.
During 2006, gross lending fell from the previous year by 4.5%, from 217.5 billion to 207.8 billion.
With consumers appearing to be more dedicated to reducing their spending and paying back debts, they are likely to benefit from increased competition in the personal loan market.
The report says: "Given the current difficult lending environment and high levels of personal indebtedness, lenders operating in the personal loan market have had to review their pricing and acquisition models."
Datamonitor also claimed that rather than merely focusing on pricing, some lenders were concentrating on reducing risk, meaning "consumers with a poor credit history will find it harder to access credit".
To compensate for this, lenders will improve the quality of their lending to existing customers, hoping to better suit their personal loan needs in the future.
"Customers with good credit records can expect to benefit from lower interest rate offers," Datamonitor concluded.
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