Lower-income households are suffering from a reduction in lending, which analysts have attributed to tighter credit processes among non-bank lenders.
John Cronin, financial analyst, investment banking at Goodbody, cited The Joseph Rowntree Foundation’s report, which found that workers on the lowest incomes have suffered worse through the economic downturn.
He said the report raises legitimate concerns and also serves as a reminder that certain households are more likely to face challenges in accessing credit.
Cronin said that some households have suffered from a contraction in lending due to tighter underwriting standards and non-bank lenders facing difficulties.
“It reminds us of the challenges that certain households may also be facing from a credit access perspective as the addressable market for non-standard lenders expands and as, simultaneously, the supply of lending in that domain is reducing owing to tighter underwriting standards (in the case of both banks and non-standard lenders alike) and well-documented pressures on certain lenders,” Cronin said in an email to Goodbody members.
“In relation to the latter, non-banks have come under particular pressure…with the findings from the FCA’s June [and] August 2020 research (published last week) highlighting this issue (albeit there has been some improvement since the regulator conducted its research).”