Consumer credit strengthening as Britons’ confidence soars
Improving economic conditions combined with record-low interest rates has encouraged banks and consumers to lend and borrow more since the start of 2014. Borrowing has become cheaper in the UK, which is starting to trigger an increase in lending; a situation which has played out so far in 2015 and is expected to improve further over the next four years, finds a new report by Timetric.
Timetric forecasts the stock of consumer credit to grow from GBP168.8 billion to GBP177.5 billion at the end of 2015, and to reach GBP204.6 billion at the end of 2019, with an overall growth of 19.6% and an average annual growth of 3.9% throughout this period.
Outstanding credit card balances are also expected to increase during the forecast period as consumer confidence continues to rise. Timetric expects these balances to be at GBP64.2 billion at the end of 2015, and to reach GBP74.0 billion at the end of 2019, recording an average annual rate of 3.9%.
“Borrowing is as cheap as it’s ever been and consumer credit is subsequently expected to continue growing throughout 2015. These conditions will not last for an extended period, however, as interest rates look set to rise to at least 0.75% in the middle of 2016, which will enhance the cost of credit. However, improving economic conditions and consumer confidence should ensure that the industry copes with interest rate rises, and continues to grow,” comments Ben Carey-Evans, Analyst at Timetric.
“Consumer confidence continues to soar amongst a backdrop of low inflation and increasing wages, meaning consumers are gradually becoming more prepared to take on credit and take on higher-value purchases,” says Carey-Evans.
Timetric is a leading provider of online data, analysis and advisory services on key financial and industry sectors. It provides integrated information services covering risk assessments, forecasts, industry analysis, market intelligence, news and commentary. For more information and updates, please visit www.timetric.com