The value of new business in the consumer finance new business grew by 20% in May compared with the same month last year, new figures published by the Finance & Leasing Association (FLA) have shown.
In the five months to the end of May, new business was also worth 28% more than in the same period in 2021.
FLA members in 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.
The credit card and personal loan sectors together reported new business up by 32% in May compared to last year, while the retail store and online credit sector reported new business growth of 15% over the same period.
Commenting on the figures, director of research and chief economist at the FLA, Geraldine Kilkelly, said: “The consumer finance market returned another strong performance in May with further growth across each of the main finance products reflecting the post-pandemic recovery and the higher cost of goods and vehicles faced by consumers.
“Pressures on household incomes from higher inflation, interest rates and taxes are expected to subdue consumer spending in the coming months. Growth in UK consumer credit is expected to ease, with gross lending forecast to grow by 14% in Q3 2022 and 9% in Q4 2022 compared with the same quarter in 2021.
“As always, customers who are concerned about meeting payments should speak to their lender as soon as possible to find a solution.”
In the second charge mortgage sector, the value of new business in May totalled £133m, which was 53% higher than the same month last year.
“The second charge mortgage market has returned to more normal levels of new business since June 2021,” added FLA director of consumer and mortgage finance and inclusion, Fiona Hoyle. We expect new business to continue to grow in the coming months but at a slower rate. Annual new business volumes in May were 2% lower than the pre-pandemic peak.
“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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