Ease in affordability of loan approval, growing preference for purchasing a product through a loan, and increasing issues of limited savings are the leading factors driving the global loan market during the forecast period. According to TechSci Research report, “Loan Market – Global Industry Size, Share, Trends, Competition, Opportunity, and Forecast, 2018-2028F,” the global Loan market is expected to project robust growth in the forecast period as loans are considered a more convenient and flexible option. Moreover, fast funding time, availability of loan providers, and a defined loan repayment tenure are certain crucial factors influencing the loan market.
The Important Aspects of the Loan Market
Loans are broadly categorized into secured or unsecured loans. Loans that are backed by collateral, such as mortgages and auto loans, are referred to as secured loans. In these situations, the asset used to secure the loan serves as collateral. For example, the home serves as collateral for a mortgage while a car serves as collateral for a car loan. For other types of secured loans, borrowers may be required to provide additional forms of collateral.
Credit cards and signature loans are secured loans, in contrast. This indicates that they lack any form of collateral backing. Due to the higher default risk compared to secured loans, unsecured loans typically have higher interest rates. i-If the borrower defaults on a secured loan, the lender may seize the collateral. Unsecured loan rates frequently change dramatically depending on a number of variables, including the borrower's credit history.
After the extraordinary government stimulus during the COVID-19 pandemic dampened businesses' and consumers' appetite for bank borrowing, analysts and investors have been closely monitoring loan growth, which is a key driver of bank income. Loan demand started to increase in the first quarter as the economy recovered from the pandemic, driven by consumer spending and businesses building up inventories.
Loan demand started to increase in the first quarter as the economy recovered from the pandemic, driven by consumer spending and businesses building up inventories. Despite aggressive US Federal Reserve interest rate increases igniting recession fears, that trend persisted during the second quarter. Two of the largest US lenders, JPMorgan Chase & Co., and Wells Fargo & Co. reported that there were few indications of deteriorating credit quality as their loan books increased in the second quarter by 7% and 8.4%, respectively, compared to the year 2021.
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The global loan market is segmented based on type, provider type, interest rate, tenure period, region, and competitional landscape. Based on type, the market is further fragmented into Housing loans, Mortgage loans, Personal loans, Auto loans, Business loans, Home Improvement, and Others (Gold loans, Education loans, Agriculture loans, Retail loans, etc.). Based on Provider Type, the market is categorized into (Banks, Non-Banking Financial Companies, and Others (Fintech Companies, etc.). Based on Interest Rate, the market is segmented into Fixed and Floating. Based on the Tenure Period, the market is segmented into Less than 5 years, 5 years to 10 Years, 11 years to 20 years, and more than 20 Years. The market analysis also studies the regional segmentation, which is divided among North America, Europe, Asia-Pacific, Middle East & Africa, and South America.
Among types, the personal loan category is the most developed market for loans, which commands a significant market share as numerous people have been using personal loans to meet a variety of needs, including big-ticket purchases, daily expenses, and medical emergencies. Personal loans are consistently the most popular option among borrowers for overcoming a financial crisis. Because of this, there is consistently high demand for personal loans, which is anticipated to spur growth.
Key market players in the global loan market include:
- Bank of America Corporation
- JPMorgan Chase & Co.
- Citigroup, Inc.
- Wells Fargo & Co.
- U.S. Bancorp
- PNC Financial Service Group, Inc.
- American Express Company
- Ally Financial Inc.
- Truist Financial Corporation
- Bank of China
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The North American region is a prominent leader in the loan market across the globe., With the significant numbers of financial and non-financial institutions, it plays a crucial role in the loan industry. Moreover, the increased cooperation between banks and marketplace lenders has already been seen in the U.S. These collaborations will help gain scale, raise investor and borrower awareness, and even cut customer acquisition costs.
"The loan industry is rapidly expanding and changing is a marketplace, which involves the support of new businesses and technologies, individual borrowers and savers, and institutional investors. Following rapid development in markets like the U.K., US., and China, lenders have recently gained prominence. In addition, there are a number of factors within the Asia Pacific region that are anticipated to fuel its ranking as the fastest growing as the region's fast-paced economic development, its sizable but underbanked population, and regulatory and governmental support for inclusive financial development.” said Mr. Karan Chechi, Research Director with TechSci Research, a research-based global management consulting firm.
“Loan Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028F Segmented By Type (Housing Loan, Mortgage Loan, Personal Loan, Auto Loan, Business Loan, Home Improvement Loan, Others (Gold Loan, Education Loan, Agriculture Loan, Retail Loan, etc.), By Provider Type (Bank, Non-Banking Financial Companies, and Others (Fintech Companies, etc.), By Interest Rate (Fixed and Floating), By Tenure Period (Less than 5 years, 5 years to 10 Years, 11 years to 20 years, More than 20 Years), By Region” has evaluated the future growth potential of the global loan market and provides statistics and information on market structure, size, share, and future growth. The report is intended to provide cutting-edge market intelligence and help decision-makers take sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities present in the loan market globally.
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