Volumes of new business conducted in the consumer finance space fell by 5% in May compared to last year, new figures published by the Finance & Leasing Association (FLA) have shown.

According to the trade body’s latest data, new business is down by 4% for the first five months of 2023, when 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.

In May, the consumer finance space experienced £10.04bn worth of new business carried out during the month, with the largest contributions coming from the credit cards and personal loans sector (£5.42bn), motor finance (£3.30bn), and retail store and online credit sector (£816m).

The retail store and online credit sector reported new business up in May by 1% compared with the same month in 2022, while the credit card and personal loan sectors together reported a fall in new business of 4% over the same period.

Director of research and chief economist at the FLA, Geraldine Kilkelly, said: “May saw a continuation of recent trends in the consumer finance market with lower levels of new business across most finance products compared with the same month in 2022. Despite this, consumer finance new business provided by FLA members in May was the second highest total reported in 2023 so far.

“The industry remains cautiously optimistic about the prospects for future growth, with 69% of consumer finance respondents to the FLA’s Q2 2023 industry outlook survey anticipating some increase in new business over the next year.”

The FLA’s figures for the second charge mortgage market revealed that May registered a total of £120m worth of new business, the second highest total in 2023, although the figure was still down 11% on the same month last year.

Director of consumer and mortgage finance and inclusion at the FLA, Fiona Hoyle, added: “May saw the second charge mortgage market report its second highest level of new business in 2023 so far, but volumes continued to be lower when compared to the same month in 2022.

“The distribution by purpose of loan in May showed 58% of new agreements were for the consolidation of existing loans, 14% for home improvements, and a further 23% 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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