Loan defaults and high-cost borrowing highest in country accross Yorkshire and the Humber

Credit use across the region has also increased at the same rate as the rest of the country, reaching its highest level since the start of the pandemic.

The data, collected as part of the Financial Vulnerability Index (FVI) shows that households increased borrowing to meet the inflated cost of food and energy bills, despite rises in interest rates.

Following the release of the FVI, John Pears, UK CEO at Lowell has called for the government to increase support for households in financial need.

“Increased reliance on borrowing to meet the rising cost of living is undermining financial resilience and driving urban vulnerability in Yorkshire and the Humber,” he said.

“Households are having to fork out more money to pay for essentials and as their budgets are stretched to their limit, people are turning to credit more and more.

“The new government needs to take action to ensure households, especially the lowest incomes, get the support they need. With the recent changes to the price cap, bringing energy bills down has to be the priority. This needs to be at the top of the agenda.”

Credit usage across the UK has hit 51.3%, the highest it has been since the early months of the pandemic.

This figure shows an increase from 48.7% in Q4 of 2021.

In Yorkshire, the percentage of the population using high-cost credit reached 13.6%, a figure 2.5 points higher than the rest of the country.

The default rate in Yorkshire is also 0.3 points ahead of the UK average.

Despite these figures, the use in payday lending has continued to fall across the UK.

The share of UK adults with such loans dropped from 13.7% (Q3 2021) to 11.1% (Q2 2022)

Lowell UK suggests that this fall could be in part due to regulatory intervention in the market.

The FVI’s results are based on anonymised data from over 9.5m Lowell UK customer accounts and other publicly available data.