New figures reveal Northern households have highest ratio of outstanding personal loans compared to earnings in Great Britain

13 August 2018

Average household in the North West has £1,395 outstanding, which equates to 5.3% of their annual income

- In North East this figure also stands at 5.3%, while in London it’s as low 4.2%

- The average outstanding value of personal loans across Great Britain is £1,371

A new report reveals households in the North West and North East of England have the highest value of outstanding personal loans as a share of income in Great Britain. Analysis by the Centre for economics and business research (Cebr), commissioned by Shawbrook Bank, reveals households in the North West have an average of £1,395 outstanding in personal loans, while in the North East it’s slightly lower at £1,348 (see Figure 1).

Households in London, the South East and West Midlands have higher monetary amounts outstanding, which suggests they take out larger loans. But by adjusting the average value of outstanding personal loans per household with average levels of income in each region a drastically different picture emerges.

The North East (5.3%), North West (5.3%) and Yorkshire & Humber (5.2%) have the highest level of outstanding personal loans to annual household income, while London has the second lowest at just 4.2%.

Chart showing value of outstanding loans as a share of income

For all of the UK’s regions, the average value of outstanding loans per household has increased significantly between 2013 and 2017 by an average of nearly 19%. In the North West the amount outstanding has risen from £1,214 to £1,395 during this four-year period, representing an increase of 15%. Similarly, in the North East the average value has risen by 12% from £1,199 to £1,348.

These findings make the provision of affordable sources of finance more important, but worryingly borrowers in these regions could be paying more for their loans than initially expected. The report finds the average APR paid by a borrower for a fixed rate loan is currently 7.3% whereas the representative rates advertised by leading UK lenders for the average loan value (of £9,000) ranges from 2.8% to 4.9%.

The potential discrepancy in rates may not be something most North West or North East loan applicants are aware of, 76% and 82% respectively of those surveyed*, expect to get the advertised representative rates but current rules dictate just over half (51%) are actually required by regulators to get them.

Paul Went, Product and Markets Director at Shawbrook Bank says:

“The study reveals borrowers in the North West and North East are taking out loans which make up a bigger share of their annual income, which could mean they have less financial flexibility.

“Moreover, the disparity between so-called representative rates and the rates borrowers actually end up paying could mean households have a higher value outstanding than they might have initially expected. The marketing of personal loans is clearly leading to some confusion among loan applicants in these regions and is, arguably, misleading borrowers.

Went continues: “The growing scale and significance of the personal loans market means that it’s more important than ever to ensure loan applications are as transparent as possible for people. A widening gap between expectation and reality when it comes to loans is bad for all concerned. 

Went concludes: “We believe that’s the wrong way to do things and two thirds of the borrowers we surveyed strongly support that view. As a result we are making a clear commitment to how we advertise and market our personal loans, and hope that this will lead other lenders to consider the approach they take. Our new Charter includes five clear promises to ensure that people don’t feel misled when they come to Shawbrook.”

To view Shawbrook’s Transparency Charter and its five promises to prospective borrowers in full visit:

 Chart showing value of outstanding personal loans per household by UK region


Our consumer survey was conducted by 3Gem Research, and was undertaken between 22nd March and 29th March. The total sample size was 1,500 adults who had applied for a personal loan within the last two years. The sample was weighted by age, region and gender so as to be representative of the national pool of recent loan applicants. Data published by the Bank of England (BoE) on consumer credit and interest rates on personal loans, as well as the BoE’s quarterly credit conditions survey, were used to supplement this primary research. UK Finance’s dataset on lending by postcode sector was used to develop regional insights into how household borrowing varies across the UK.