The top three reasons for taking out a UK loan are car repair or purchase, debt management and home improvements.
And consumer dissatisfaction with the availability of NHS services is also impacting consumer behaviour. Metro Bank’s Q1 Borrow Barometer highlights more consumers taking out a loan to pay for medical treatment.
Metro Bank Borrow Barometer – emerging trend
Improving appearances and fixing teeth continue to be a high priority for customers. As NHS waiting lists grow and finding an NHS dentist becomes more and more difficult this is likely to continue.
The average loan for medical bills in Q1 2023, including surgery, cosmetic surgery or hair and dental treatments was £4,939.
Some 16% or of such loans are for dental treatment with an average loan amount of £4,333.
The top reason to take out a loan in Q1 was car purchase or repair – average loan size of £9,283. Debt consolidation came in second with a slightly higher average loan amount of £9,306. Home improvements rank third, with an average loan size of £9,115.
Customers borrowed around £5,000 (£4,913) on average to cover holiday and travel expenses in Q1. Borrowing to pay for an engagement or wedding stood at around £8,000 (£7,901). People are also continuing to borrow in order to invest in themselves or their business. Reasons include upgrading their business, or invest in training courses and further education to add a new qualification.
Metro Bank Borrow Barometer – work and play
Customers borrowed £6,500 on average for their business costs. This covers everything from starting up to buying new tools.
Borrowers are also choosing to invest in themselves and their family to improve their career prospects. The average loan for education costing £5,750. Seventy five percent of all loans for studying and training qualifications in Q1 were for school fees and further education.
Meantime, customers were borrowing just under £5,000 on average for holidays and travel in Q1.
Caravans and camper vans are another high value and popular item. Borrowers take out an average of just under £10,000 (£9,667) in this category.
The average wedding loan was for £7,901. This compares favourably to the average cost of a UK wedding which stands at £18,400.
Metro Bank Borrow Barometer – unexpected bills
Unexpected bills featured prominently in the Metro Bank Borrow Barometer. With one in five Brits having no savings at all it is unsurprising.
Funerals are becoming increasingly expensive with people borrowing £3,500 on average to cover these expenses.
The average loan for unexpected tax bills stood at just over £7,000 (£7,083).
Loans for vet treatments averaged out at £1,667.
“This data provides a brief snapshot of customers’ financial pressures and aspirations,” said Richard Saulet, MD, consumer finance, Metro Bank.
“It paints a diverse picture ranging from people investing in themselves or growing their business, to exploring the planet – be it lush tropical climes or racing off on a new motorbike.
“We can’t overlook the fact people are borrowing as a means of coping with today’s cost of living pressures. Loans to support unexpected bills such as lawyer fees or medical bills also remain high.”