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Boe Lending To Individuals July 2012 - Some Major Adjustments


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BoE quarterly release so more data than the usual monthly ones....

1. Student loan data was included in unsecured consumer lending data completely obscures real consumer lending patterns.

2. Actual consumer lending has fallen since 2009 but the data didn't say that!

3. ~40 existing data series withdrawn and new ones added

4. student loans are currently 20% of unsecured lending stock (and will rise)

From the bbc:

Credit shrinks Separately, the Bank of England has revised its presentation of figures on non-secured loans, or consumer credit.

This covers credit card lending, overdrafts, bank loans and hire purchase agreements.

The Bank has stripped out the huge and growing sums of money that have been lent as student loans.

The amount outstanding has doubled in the past five years to £47bn, almost as much as the outstanding stock of borrowing on credit cards, which currently stands at £55bn.

The effect of the Bank's change is to show that consumer credit has been shrinking since the start of 2009.

Previously the figures had shown that it was still growing, despite the recession and banks' reluctance to lend to anyone other than the most credit-worthy borrowers.

Credit card lending makes up only a third of overall consumer credit, but it too is slowing down so much that its annual growth rate is now down to just 0.5% - the slowest annual growth rate since the Bank's current statistics started in 1994.

BoE:

http://www.bankofeng....aspx#Revisions

http://www.bankofeng...s/art1jul12.pdf

Please note that the consumer credit data contained within this and forthcoming lending to individuals statistical releases exclude student loans data. Please see Notes to Editors 5. Consumer credit (excluding student loans) decreased by £0.2 billion in July (Table D), compared to the previous six-month average of £0.0 billion. The twelve-month growth rate was -0.6%. Within consumer credit (excluding student loans), credit card lending decreased by £0.1 billion and other loans and advances decreased by £0.1 billion.

The current measure of consumer credit published by the Bank of England includes lending on credit cards, overdrafts and other loans, including those made through Government student finance schemes. The stock of student loans has doubled over the five years to 5 April 2012 to £47 billion, and now represents more than 20% of the stock of overall consumer credit. With student loans unlikely to be affected by the same factors that influence the other components of consumer credit, the Bank is proposing a new measure of consumer credit that excludes student loans. Consumer credit excluding student loans is estimated to have contracted by 0.4% in the year to June 2012. This new measure of consumer credit will be introduced in the August 2012 Bankstats release.

Introduction

The Bank of England publishes monthly data on consumer credit, split into lending on credit cards and other loans and advances.1 The series for other loans and advances includes overdrafts and loans made through Government student finance schemes ("student loans"). Data on student loans are provided by the Student Loans Company (SLC). Student loans cover maintenance loans paid directly to students and, from 2006/07 onwards, tuition fees to Higher Education Institutions on behalf of students who have taken out tuition fee loans. According to the SLC, the outstanding balance of student loans has doubled over the five years to 5 April 2012 to £47 billion,2 and now represents more than 20% of the stock of overall consumer credit. Government projections suggest that the outstanding balance of student loans will be more than £80 billion by 2017/18.3

New Measure

Student loans are unlikely to be affected by the same factors that influence the other components of consumer credit: credit cards, overdrafts and other loans. To make the underlying trends in consumer credit more transparent, the Bank is proposing a new measure of other loans and advances, and consequently overall consumer credit, which excludes student loans.

The annual growth rate in the stock of other loans and advances (including student loans) is positive and has picked up over the recent past, following a slowdown after the financial crisis (Chart A). Excluding student loans, this annual growth rate has been negative since 2009.

Edited by koala_bear
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BoE quarterly release so more data than the usual monthly ones....

1. Student loan data was included in unsecured consumer lending data completely obscures real consumer lending patterns.

2. Actual consumer lending has fallen since 2009 but the data didn't say that!

3. ~40 existing data series withdrawn and new ones added

4. student loans are currently 20% of unsecured lending stock (and will rise)

From the bbc:

BoE:

http://www.bankofeng....aspx#Revisions

http://www.bankofeng...s/art1jul12.pdf

1990 - 2005: grow the economy by levering on housing

2005 - 2012 keep the economy ticking over by leveraging learning

What's left for them to lend on? How about:

borrow to pay for

  • your health care

  • borrow now for your old-age social care

  • borrow now to buy your cemetary plot

  • borrow now pay in advance

for next year's bin collection fees

Any more suggestions?

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1990 - 2005: grow the economy by levering on housing

2005 - 2012 keep the economy ticking over by leveraging learning

What's left for them to lend on? How about:

borrow to pay for

Any more suggestions?

Equity release has a lot of mileage in it.

Otherwise, it's time for "great grandchildren debt bonds", borrowing required for license to be born.

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1990 - 2005: grow the economy by levering on housing

2005 - 2012 keep the economy ticking over by leveraging learning

What's left for them to lend on? How about:

borrow to pay for

  • your health care
  • borrow now for your old-age social care
  • borrow now to buy your cemetary plot
  • borrow now pay in advance

for next year's bin collection fees

Any more suggestions?

Borrow to fund your JSA, housing and council tax benefit, prescription, optical and dental care costs and mandatory pension and NI contributions.

-They have even proposed this.

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1990 - 2005: grow the economy by levering on housing

2005 - 2012 keep the economy ticking over by leveraging learning

What's left for them to lend on? How about:

borrow to pay for

  • your health care
  • borrow now for your old-age social care
  • borrow now to buy your cemetary plot
  • borrow now pay in advance

for next year's bin collection fees

Any more suggestions?

brainwave: just lend everyone a months salary every month...we could all pack up and go home!

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Can you wipe out student debt with bankruptcy ? - Answer : No, therefore it shouldn't be included as unsecure debt as it is more secure than mortgage debt.

These figures do give us an indication of how ******ed those taking out student debt are now and will be for the rest of their lives.

While we deride Boomers, those of us who came after the boomers but haven't got stupid amounts of student debt are going to be in an advantaged position in future. Kids thinking of going to university need to take a long hard look at what their prospects and potential earnings will be based on course and the university they are to attend. If they do a lot of universities will get a very rude awakening.

I expect this realisation to come in after this years first years graduate and realise what a huge mistake they have made.

Edited by Ulfar
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