New business conducted in the consumer finance sector grew by 1% in September compared with the same month in 2020.

According to new figures published by the Finance & Leasing Association (FLA), new business in the nine months to September 2021 was 13% higher than the same period last year.

FLA members in the consumer finance sector include banks, credit card providers, store card providers, personal loan and instalment credit providers, second charge mortgage lenders, as well as motor finance providers.

The credit card and personal loan sectors together reported new business up by 25% in September compared with the same month in 2020, as well as growth of 12% in the nine months to September 2021.

September’s figures also showed that the retail store and online credit sector reported new business up by 1% compared with same month last year, and growth of 9% in the nine months to September this year. 

“Some consumer finance sectors continued to report strong growth in September as they recover from the pandemic, but ongoing supply chain issues adversely affected the car finance market and slowed growth overall,” said FLA director of research and chief economist, Geraldine Kilkelly.

“The squeeze on household incomes from higher inflation (primarily driven by rising energy prices) and higher taxes is expected to weigh on consumer spending over the next year. It is not surprising that the Bank of England has refrained from raising interest rates at this time given that it expects the higher rates of inflation to be temporary and does not want to derail the recovery in the UK economy.

“Our latest research suggests that the industry has maintained its optimism about the opportunities for growth despite the risks to the recovery from supply chain disruption, higher inflation and further waves of Covid-19.”

In the second charge mortgage sector, September saw a total £102m worth of new business, which was a figure up by 78% on the same month in 2020.

Commenting on these figures, FLA director of consumer and mortgage finance and inclusion, Fiona Hoyle, added: “The second charge mortgage market reported its sixth consecutive month of growth in September, with new business returning to levels seen pre-pandemic. We expect new business volumes to continue to grow during the remainder of 2021 as demand remains solid.” 

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