The volume of new business agreed in the consumer finance sector increased by 2% year-on-year in October, new data from the Finance & Leasing Association (FLA) has shown.

Over the 10 months to the end of October, new consumer finance business was 1% higher than in the same period in 2023.

Members of the FLA from across 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.

In the latest data, the total value of new consumer finance business hit £9.6bn in October. The credit card and personal loans sectors (£5.1bn) together reported new business 3% higher than in October 2023, while the retail store and online credit sector (£803m) reported new business growth holding steady over the same period.

“Our latest market data shows modest growth in consumer finance new business overall in October reflecting a subdued picture across most finance products apart from second charge mortgages,” said director of research and chief economist at the FLA, Geraldine Kilkelly.

“The outlook for consumer spending has weakened with the prospect of slower wage growth and higher taxes weighing on the recovery in real household disposable incomes.

“The FLA’s Q4 2024 Industry Outlook Survey showed that 63% of consumer finance providers expected some increase in new business over the next year, compared with 71% in the Q3 2024 Survey, while a further 13% expected new business levels to remain stable.”

In the second charge mortgage market, the FLA’s figures revealed that new business totalled £169m in October, a figure up 39% on the same month last year.

Commenting on these figures, the FLA’s director of consumer and mortgage finance and inclusion, Fiona Hoyle, added: “Housing market activity has begun to pick up since the Bank of England started to cut Bank Rate in the second half of this year.

“In October, the second charge mortgage reported further strong new business growth by both value and volume compared with the same month in 2023. In the 10 months to October 2024, new business volumes were 17% higher than in the same period in 2023.

“The distribution of new business by purpose of loan in October showed that the proportion of new agreements which were for the consolidation of existing loans was 58.4%; for home improvements and the consolidation of existing loans was 23.3%; and for home improvements only was 12.4%.”

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