Published: November 2012
Price: Single licence: £795 / Extended licence: £1595
About this report
This report reviews the UK home credit market, or doorstep lending, as the industry it is sometimes known. It quantifies the market size, historical growth rates, segmentation patterns and levels of industry profitability while reviewing key factors behind these figures.
It also contains an in-depth analysis of the relevant drivers of industry growth – in particular the macroeconomic environment and supplier trends – setting out historical trends and available forecasts. Our forecast for industry growth is based on this analysis of historical trends and growth drivers.
What are the objectives of this market report?
Home credit remains a major industry providing finance to large numbers of people throughout the country. It has continued to grow despite increasing competition from other forms of credit such as payday loans. The industry is frequently in the news but is not always well understood. Lenders are often criticised for charging high rates of interest which exploit low-income consumers. They are also frequently praised for offering credit to those who cannot obtain it from mainstream sources and giving them an alternative to illegal loan sharks. This report aims to probe beneath these two statements, explore the factors which have driven the high rates of growth and provide a view on how likely it is to continue in the future.
We believe that, in order for those involved in the home credit market to make the best decisions in this complex and changing environment, they need to have access to the best information. The aim of this report is to provide this.
It is intended for:
– Operators of home credit businesses themselves
– Investors in these businesses
– Market regulators and policymakers
– Banks, analysts, consultants and other parties with interests in the sector
What are the sources and methodology?
This report is based on:
– Interviews with senior-level contacts across the high-cost credit market
– Extensive research into published industry sources
– In-depth analysis of the macroeconomic environment and relevant home credit market drivers
– Financial analysis of the accounts of companies in the industry.
Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.
Home credit market forecasts have been constructed using simple assumptions which are clearly stated. Supporting evidence is provided for our assumptions but readers can easily flex them to model alternative scenarios.
Home credit market overview – 7
– Market characteristics and trends
– Value drivers
– Alternatives to home credit
– Borrowing costs
Home credit market size and growth – 19
Home credit market drivers – 20
– Discussion of market drivers
– Drivers and their impact:
– Macroeconomic indicators
– Access to banks
– Consumer credit and lending
Competitive landscape – 31
– Leading companies
– S&U (Loansathome4U)
– Welcome Financial / Cattles plc (Shopacheck)
– Mutual Clothing & Supply
– Morses Club
Forecasts – 33
– Driver forecasts
– Real GDP and inflation
– Household disposable income
– Home credit market forecast
– Risks to the forecast
Lender profiles – 38
Appendix – 40
List of figures (UK Home Credit Market Report)
1.Main reason for taking out home credit loan
2.High cost credit types APR / %
3.Total amounts paid including principal / £
4.Reasons for taking out agreement / %
5.Historical UK home credit market size / £m
6.UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes
7.Historical number of unemployed and part time employed / (‘000)
8.Historical number of new debt solutions per year / (‘000)
9.UK student loan total outstanding balance / £bn
10.UK real median income and gross household disposable income annual growth rates / % annual change
11.Historical UK number of bank branches
12.European countries number of bank branches per million people
13.European countries bank branches CAGR (1999-2010) / %
14.UK outstanding consumer credit / £m
15.Loan-to-deposit ratios at major UK banks / %
16.Number of credit cards in issue / m, end of year
17.Percentage of gross lending not repaid / %, year average
18.Leading UK providers: home credit market shares / £m
19.UK nominal GDP, inflation (GDP deflator) and real GDP / % annual changes
20.Forecast number of unemployed and historical part time employed / (‘000)
21.UK real household disposable and median income / % annual change
22.Forecast UK home credit market size / £m
23.Provident Financial summary financials
24.S&U plc summary financials