Personal Loans Birmingham

Personal Loan Data in Birmingham

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For more information contact:

Richard Browne ? Partnership Manager Birmingham City Council richard.browne@.uk

Background

In December major lenders in the UK published details of borrowing to individuals and businesses at a local level for the first time. This voluntary move by select institutions provides details of more than ?1 trillion of lending across Britain comprised of residential mortgage balances, loans to small and medium-sized enterprises (SMEs) and unsecured loans to personal customers.

The industry-wide data has been compiled jointly by the British Bankers' Association (BBA) and the Council for Mortgage Lenders (CML).

This briefing note will focus on the "personal loan" data and outline what the level of borrowing is across Birmingham.

The Data

The data set features only a select number of lenders. Participating lenders in the personal loan datasets are: Barclays, Lloyds Banking Group, HSBC, RBS, Santander UK, Clydesdale & Yorkshire Banks and Nationwide Building Society. Obviously there are a great deal of other lenders within the market, however the institutions above account for about 60 per cent of bank lending to SMEs, 73 per cent of mortgage lending and 60 per cent of unsecured personal loan markets in Britain.

Individual institutions have released their own data, with the BBA and CML providing aggregated totals.

Data has been released at a postcode sector level, and show a simple total amount outstanding balances that have been advanced to, and drawn down by, borrowers (explanation of postcode sectors is outlined below) as of the end of June 2013. Personal loan figures are based on Bank of England reporting classifications, and reflect unsecured borrowing by individuals and households. The data does not show the number of loans.

As already stated this information is only a snapshot of the whole picture of personal lending. The figures for participating lenders represent under 30% of the total national unsecured credit market and around 60% of all personal loans. There is a need to be careful when interpreting local level information as it will not necessary truly representative of the picture of unsecured credit as a whole. Indeed in Birmingham our diverse population may mean that there are higher proportions of residents who use alternate providers.

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What is a postcode sector and how do they relate to Birmingham? A postcode has two parts, an Outward and Inward code, separated by a space A postcode operates at four levels ? Area, District, Sector and Unit. There are 9,000 postcode sectors in the UK. The diagram below shows how the B4 7DG postcode relates to these different levels. Area District Sector Unit

B 4 7 DG

To ensure customer confidentiality, data is sometimes not disclosed such as where fewer than 10 borrowers exist in the sector or where borrowing is highly concentrated in a small number of the largest borrowers in the sector. In addition individual lenders are not obliged to publish borrowing at sector level if they hold less than 10 per cent of SME borrowing, 3 per cent of mortgages or 3 per cent of personal loans in a sector. Although when applied to the aggregate dataset, the total value of borrowing that needs to be redacted is relatively small (less than 0.5 per cent of personal loans). Postcodes are not uniform and the population and geographical size of postcode sectors vary greatly. They are also not conterminous with other boundaries such as local authorities, wards and constituencies. For example the postcode area for "Birmingham" (228 sectors) is much larger than the local authority boundary area for Birmingham City Council, incorporating areas such as Bromsgrove, Redditch, Tamworth and parts of Solihull (shown below left). Where the published data summarises "Birmingham" it is for this area and not the local authority boundary. However to make this data more meaningful for local decision makers, this briefing looks at only those postcode sectors which relate to the Birmingham boundary (below right ? 126 sectors).

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What does the Birmingham data tell us?

Number of Total Population Total Population Total Unsecured Average per Postcode Sectors (Census 2011) 18+ Census Personal Loans capita

Average per Adult (18+)

England England Average Average per per capita Adult (18+)

126

1,122,074

838,352

? 462,956,113 ? 412.59 ? 552.22 ? 488.51 ? 621.40

Totalling the outstanding loans in the126 postcode sectors aligned to Birmingham City boundary indicates that there is ?462,956,113 still outstanding (the figure for the "Birmingham" postcode area is ?852,449,764). While the absence of data showing the number of loans in each postcode sector makes it impossible to get a true reflection of the average loan in each area; by using census data, it is possible to get a better comparison of areas by looking at the value of loans per capita (both total population and that of adults). As the table above indicates the average per capita for both total population and adults only is less than the England average.

The postcode sectors with the largest population will usually have the highest levels of personal loans. However, using per capita information the table and maps below shows those 2011 Census it is possible to show the postcode sectors with the highest level of personal loans on a per capita basis. The areas where the lowest loans per adult were recorded where a mixture of inner city areas, sectors with high student residents, and more deprived areas. These are areas are outlined in detail in the appendix.

Highest loan levels

Lowest Loan Levels

Postcode Sector

Loan per Adult

population

B76 2 B45 9 B31 5 B30 3 B31 1 B44 8 B32 4 B38 8 B32 3 B42 2

? 877.75 ? 861.87 ? 804.80 ? 804.54 ? 771.56 ? 749.00 ? 747.48 ? 743.79 ? 739.29 ? 738.96

Postcode Sector

Loan per Adult

population

B5 5 B15 1 B12 0 B29 6 B19 3 B1 1 B18 4 B29 7 B15 2 B12 8

?125.39 ?167.23 ?211.45 ?246.39 ?267.22 ?269.45 ?277.68 ?292.87 ?300.83 ?319.29

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Mapping personal loan data The following pages show the personal loan data across Birmingham in a number of ways. All maps seem to indicate that there is lower level of lending in inner city areas of Birmingham, both in terms of volume of outstanding loans and loans per capita. However without the number of individual transactions or loans, itis difficult to draw completely accurate conclusions from this information. The maps display the information in the following ways: MAP 1: Value of Personal Lending Loans ? This map just looks at the raw aggregated value of outstanding loans in each postcode sector. MAP 2: Value of Personal Loans per Capita ? This map uses the Census 2011 population estimates for each postcode sector to provide a rate of lending per person in the sector. MAP 3: Value of Personal Loans per Adult ? This map uses the Census 2011 population estimates for each postcode sector to provide a rate of lending per adult in the sector. MAP 4: Average Loan vs England Average ? this compares the personal loans per capita calculated above with the England average per capita amount (Note this vs England average NOT UK average) MAP 5: Average Loan vs England Average (Adults) ? this compares the personal loans per capita calculated above with the England average per adult amount (Note this vs England average NOT UK average)

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