The lending market in the UK is affected by a whole range of different things. Perhaps more recently, we have seen the UK lending market being hugely affected by political happenings, for example the vote for the UK to leave the European Union in June 2016. Although the leaving process has not yet begun, we have already seen the economy take a turn for the worst, affecting the UK lending market in the process. We’ve put together some of the main things which directly affect lending money in the UK.
Demand is one of the main things that affects the lending market in the UK. For example, as the demand for unsecured loans has grown, so have the amount of companies such as Money Hub, which provide short-term, unsecured loans for borrowers. The demand in the UK has largely shifted from borrowing large amounts of money to fund big purchases to borrowing smaller amounts of money, often referred to as ‘pay day loans’ to see the borrower through until they next receive their pay packet. There has also been an increase in demand in the UK for hire purchase agreements on things such as furniture, appliances and more with a number of stores now offering the chance to pay monthly.
It’s not just UK politics which directly affect the lending market – international politics can also play a part, too. Financial decisions around the world can directly affect the strength of the pound, something which is then impossible to avoid in the UK lending market. Changes to the value of the pound due to political decisions can have an impact on things such as interest rates or even the ability of banks to lend to their customers.
Many of the decisions made by banks have directly affected the UK lending market. For example, the PPI scandal of a few years ago had a huge effect on the lending market, forcing banks to find ways of earning back the money that they were losing by repaying customers the Payment Protection Insurance which they had taken. Whether they cause issues immediately or at some point in the future, decisions made by banks when lending can have some effect on the market as a whole.
When it comes to UK banks, there is more and more competition cropping up which has a direct effect on the UK lending market. With more independent credit companies available providing customers with a wide range of loans, credit cards and other credit products to suit their needs, the UK lending market needs to keep up. Many banks are also finding that it’s harder to get their customers to apply for credit as the amount of debt in the UK now means that more and more people are looking for alternatives to banks due to the fact that many do not accept customers with poorer credit ratings.
There are many different things which affect the UK lending market, from demand and competition to political decisions!
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