Business volumes in the consumer finance space were 2% higher in the 11 months to November 2023 compared to a year earlier, the latest figures published by the Finance & Leasing Association (FLA) have revealed.

New consumer finance business was also 2% up in the month of November alone when compared to the same month in 2022, after totalling £9.7bn.

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.

The credit card and personal loans sectors together reported new business up by 7% compared with the same month in 2022, while the retail store and online credit sector reported new business growth of 1% over the same period.

Director of research and chief economist at the FLA, Geraldine Kilkelly, commented: “The run-up to Christmas saw the strongest monthly new business growth reported by the credit card finance and personal loans sectors since September 2022, but overall growth remained modest.

“Better news on inflation and interest rates has provided more certainty for consumers, but the adverse impact of previous rises in these measures on household disposable incomes means consumer spending is likely to remain subdued in the near-term.

“The FLA’s Q4 2023 industry outlook survey suggests that 71% of consumer finance respondents expect some increase in new business over the next year, down from 75% in the Q3 2023 survey.”

In the second charge mortgage sector, new business totalled £123m in November, a level down 6% on the same month in 2022.

Commenting on these figures, director of consumer and mortgage finance and inclusion at the FLA, Fiona Hoyle, said: “The second charge mortgage market is on track to record annual new business volumes in 2023 of 30,500 new agreements, 10% lower than in 2022.

“The distribution by purpose of loan in November showed that 60% of new agreements were for the consolidation of existing loans, 11% for home improvements, and a further 24% 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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