Consumer finance business volumes fall 4% in March

New business volumes in the consumer finance space totalled £10.5bn in March, a 4% fall compared with the same month last year, new figures published by the Finance & Leasing Association (FLA) have shown.

Business volumes for Q1 as a whole were at a similar level across markets compared to Q1 2023.

Members at 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.

The credit card and personal loans sectors together reported new business 3% lower in March at £4.9bn, while the retail store and online credit sector reported a 14% fall in new business volumes compared to last year, to £629m.

“Consumer finance new business held steady in Q1 2024, which together with growth in household real disposable incomes supported the recovery in consumer spending during the first quarter of the year,” commented director of research and chief economist at the FLA, Geraldine Kilkelly.

“The rebound in the economy demonstrated by the latest official data was reflected in the FLA’s Q2 2024 Industry Outlook Survey which showed 82% of consumer finance respondents expected some improvement in economic conditions over the next 12 months. Over the same period, 88% of respondents anticipated some increase in the value of new business.”

In the second charge mortgage market, the sector reported an 11% rise in March, to total £137m worth of new business.

A total 2,894 reported new agreements contributed to this total, which itself was a 5% increase on the same month in 2023.

“The second charge mortgage market returned a strong performance in the first quarter of 2024 with new business growth in each month of the quarter,” director of consumer and mortgage finance and inclusion at the FLA, Fiona Hoyle, added. “In Q1 2024 overall, new business increased 14% by value and 8% by volume compared with Q1 2023.

“The distribution of new business by purpose of loan in Q1 2024 showed that the proportion of new agreements which were either solely or in part for the consolidation of existing loans held relatively steady at 82% compared with the same quarter in 2023.”

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