New business conducted in the consumer finance space saw a 51% jump in January compared with the same month in 2021, new figures published by the Finance & Leasing Association (FLA) have revealed.
The figures also showed that in the 12 months to January, new business grew by 23% compared with the same period in 2021.
Members of the FLA in the consumer finance sector include banks, credit card providers, store card providers, second charge mortgage lenders and 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 55% in January compared with the same month last year, while the retail store and online credit sector reported new business growth of 8% over the same period.
FLA director of research and chief economist, Geraldine Kilkelly, said: “The strong performance of the consumer finance market in January in part reflects shop closures during the third UK lockdown last year. Annual new business reported by FLA consumer finance providers in January was only 2% below its pre-pandemic level.
“The economic outlook in the UK and globally has weakened following the invasion of Ukraine, with consumer price inflation in the UK expected to peak at more than 8% in the first half of this year.
“This, combined with higher taxes and interest rates, will hit household disposable incomes and subdue consumer spending. Nevertheless, we continue to expect growth in FLA consumer finance sectors over the next year as members support consumers to make essential purchases.”
In the second charge mortgage space, the FLA also reported a 56% climb in new business from January last year, with a value of £91m in second charge lending.
Commenting on these figures, FLA director of consumer and mortgage finance and inclusion, Fiona Hoyle, added: “The second charge mortgage market continued its recovery in January with further strong growth in new business volumes.
“This market helps consumers in a variety of ways, including home improvements, and will continue to do so as households face increasing pressure on disposable incomes over the coming months.”
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