Consumer finance new business jumps 7% on last year

New business conducted across the consumer finance space climbed by 7% in June compared to last year, new figures published by the Finance & Leasing Association (FLA) have revealed.

June saw £9.77bn of new consumer finance business, meaning the first half of 2022 has seen 24% more new business compared to the same period in 2021.

FLA members in 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.

According to the latest figures, the credit card and personal loan sectors together reported that new business was up by 19% in June compared with the same month in 2021, while the retail store and online credit sector reported new business in June at a similar level to the same month last year.

FLA director of research and chief economist, Geraldine Kilkelly, commented: “The consumer finance market continued to report new business growth in June, but the rate of growth eased as the post-pandemic boost to activity waned and pressures on household incomes from higher inflation, interest rates and taxes weighed on consumer confidence and spending.

“We expect growth in new business to slow in the coming months. Our Q3 2022 industry outlook survey suggests half of consumer finance respondents expect new business growth over the next year, down from two-thirds in the Q2 2022 survey.

“As always, customers who are concerned about meeting payments should speak to their lender as soon as possible to find a solution.”

In the second charge mortgage space, £130m worth of new business was recorded during June, made up of 2,854 new agreements for the month. This represented a 29% increase on the value of new business compared to June 2021, and a 24% increase on the total of new agreements.

Commenting on these figures, FLA director of consumer and mortgage finance and inclusion, Fiona Hoyle, added: “The second charge mortgage market continued to report new business growth in June, but at a slower rate than in recent months. Annual new business volumes in June surpassed the pre-pandemic peak for the first time reaching 30,849 new agreements.

“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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