Income distribution of consumer credit borrowers relative to the general population  Sources: Finance & Leasing Association, Society of Motor Manufacturers and Traders (SMMT) and Bank calculations. (a) Annual sterling gross lending to individuals on dealership car finance for new car purchases provided by Finance & Leasing Association members, attributed to personal contract purchase (PCP). (b) Annual transactions on dealership car finance for new car purchases provided by Finance & Leasing Association members, as a proportion of SMMT new car registrations. Sources: NMG Survey and Bank calculations. 20  All speeches are available online at www.bankofengland.co.uk/speeches  20  Chart 15. Stylised PCP deal  Chart 16. Market share objectives as a factor contributing to changes in secured credit (a)(b)(c) availability Net percentage balances (c)  Balance remaining Car value/amount left to repay £  Car value  40  20,000 Deposit  20  18,000 Monthly payments  16,000 0  14,000 Margin  12,000  -20  10,000 Optional balloon payment  8,000 2007  2009  2011  2013  2015  -40 2017  6,000 4,000  5  10  15  20 Month  25  30  35  Source: Bank calculations. Example shown: • Car value at new is £ Car value depreciates 45% after 3 years with most of the depreciation occurring in the first year. • Initial deposit of 10%. • 36 month contract with monthly repayments of £ per month. • Optional balloon payment of £ at the end of the contract.
(b) LCF survey data scaled to match National Accounts (excluding imputed rental income, income received by pension funds on behalf of households and FISIM). LTI ratio is calculated using secured debt only as a proportion of gross income. (c) Repeat cross-section methodology used, with no controls for other factors, or how households may have moved between LTI categories between 2007 and 2009. Chart 3. UK banks’ sterling write-offs on (a) lending to individuals  Chart 4. Household debt to income ratio and (a) consumption growth over 2007-12 Adjusted consumption growth 2007-12, Per cent  10 8 6 4 2 0 -2 -4 -6  United Kingdom  -8 -10  0  Sources: Bank of England and Bank calculations. (a) Write-offs of sterling lending by UK MFIs to UK individuals. Write-offs are net of recoveries. Non seasonally adjusted. (b) Consumer credit consists of credit card lending and other unsecured lending (other loans and advances) and excludes student loans. (c) Lending secured on dwellings. 100 200 300 Household debt to income in 2007, per cent  400  Sources: Flodén (2014) and OECD National Accounts. (a) Change in consumption is adjusted for the pre-crisis change in total debt, the level of total debt and the current account balance. See Flodén, M. (2014), ‘Did household debt matter in the Great Recession?’, available at http://martinfloden.net/files/hhdebt_supplement_2014.pdf. 17  All speeches are available online at www.bankofengland.co.uk/speeches  17  Chart 5. GDP distributions through time, conditional on composite indicators of indebtedness and asset prices  Chart 6.