A new survey conducted by Oxane Partners has shed light on the outlook for the UK's private credit market. The 'Compass 2026' survey polled over 380 senior credit professionals, providing valuable insights into the industry's expectations for growth and asset management. The results suggest that the market is poised for growth, with a focus on asset-backed finance (ABF) and the increasing use of artificial intelligence (AI) in decision-making.
According to the survey, 60% of respondents expect the private credit market to grow in the next 12 months, with a significant proportion of those expecting to see increased investment in ABF. The use of AI is also seen as a key driver of growth, with 70% of respondents citing its importance in credit decision-making. However, risk discipline is also a major concern, with 80% of respondents citing market volatility as a major risk factor.
The Bank of England's Monetary Policy Committee (MPC) has been closely monitoring the private credit market, with some members expressing concerns about the impact of rising interest rates on asset prices. The MPC has raised interest rates twice in the past year, with the current base rate standing at 4.5%. This has led to increased borrowing costs for households and businesses, which could impact the demand for private credit.
For UK savers, the growth of the private credit market could lead to increased investment opportunities, but also increased competition for funding. Mortgage holders may see a rise in interest rates, which could lead to higher monthly payments. Investors should be aware of the risks associated with the market, particularly in relation to market volatility and the use of AI in decision-making.
As the UK's private credit market continues to grow, it is essential for households and businesses to be aware of the risks and opportunities associated with it. With the Bank of England closely monitoring the market, it is likely that we will see further changes to interest rates and monetary policy in the coming months.