A study by accountants Ernst & Young’s EY Item Club has predicted that consumer lending in the UK will rise by 3.1% in 2014. The corresponding annual increase for 2013 was only 0.8%. A 3.1% increase would take total lending to £164 billion, which would represent the largest lending market since 2010.
Improving Lending Market
Lenders are expected to take advantage of an improving market, with write-offs expected to amount to only 2% of loans by 2015, compared to 5.5% in 2010. Household debt-to-income ratios are down from 170% to 140%. This also reflects improvements favourable to trusted compliance consultants in the UK.
Andrew Goodwin, senior economic advisor to the EY ITEM Club forecast, commented on the report: “Last year we saw growth in credit card lending and demand for car finance recovering strongly, but other forms of unsecured credit either fell or remained stagnant. This year we expect growth across the board – as well as a swell in consumer demand for credit cards, we expect stronger demand for big-ticket purchases, driving retail finance and personal loans, which will be good news for banks.”
Goodwin added that 2014 could be a watershed year for access to credit by saying: “2014 will hopefully be the turning point for many UK households’ access to credit.”
Increase in Consumer Lending
The study also predicts that growth in consumer lending will average 3.7% over the period 2015 to 2017. Mortgage lending is expected to rise by 3% in 2014. In case of any regulatory issues, there are compliance services that provide quality solutions.
Business lending is expected to rise by 2.5% in 2014, taking the total to £417 billion. But although rises of 4.5%, 5.5 and 6.8% respectively are expected in the period 2015 to 2017, total business lending will remain well below the levels seen in 2008 – the £417 billion figure expected at the end of this year is still 27.5% below the peak figure. Whereas the consumer credit market was already recovering significantly last year, the last quarter of 2013 saw the lowest level of business lending for five years. In fact, the 2.5% rise expected this year will only offset half of the £20 billion fall in lending to companies seen in 2013.
Commenting on the business figures, Goodwin said it was “a positive step towards more normal lending levels after five years of stagnant and falling lending figures.”