Volumes of new business across the consumer finance space fell by 10% in April compared to last year, new figures published by the Finance & Leasing Association (FLA) have shown.
The figures have revealed that over the first four months of 2023, new business was down 4% compared to the same period in 2022.
Members of the FLA from the consumer finance sector include banks, credit card providers, store card providers, second charge mortgage lenders, personal loan and instalment credit providers, as well as motor finance providers.
According to the latest data, a total of £8.79bn worth of new business was conducted in April. The retail store and online credit sector reported new business up in April by 5% compared with the same month in 2022, while the credit card and personal loan sectors together reported a fall in new business of 8% over the same period.
Director of research and chief economist at the FLA, Geraldine Kilkelly, said: “The performance of the consumer finance market in April reflected the ongoing uncertainty about the economic outlook as core inflation continued to rise and consumers face the prospect of further increases in Bank Rate over the summer.
“Households are likely to remain cautious about discretionary spending in the near term and our latest research suggests that the value of new consumer credit in the UK is now likely to grow by 5% in 2023 as a whole.”
The FLA also released its latest figures covering the second charge mortgage sector, showing that new business volumes reached £99m in April – a figure that represented a 23% fall in comparison to the same month last year.
Director of consumer and mortgage finance and inclusion at the FLA, Fiona Hoyle, added: “The second charge mortgage market reported a further fall in new business volumes in April as uncertainty about the economic outlook continued.
“The distribution by purpose of loan in April showed 59% of new agreements were for the consolidation of existing loans, 13% for home improvements, and a further 22% for both loan consolidation and home improvements.
“As always, customers who are concerned about meeting payments should speak to their lender as soon as possible to find a solution.”
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