Consumer finance new business remains 3% down on last year’s levels

The consumer finance sector saw business volumes fall by 3% in September compared to the same month last year, the latest figures from the Finance & Leasing Association (FLA) have revealed.

Over the nine months to the end of September, new business volumes have also remained 3% on 2022 levels.

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 retail store and online credit sector reported a fall in new business in September of 1% compared with the same month in 2022, while the credit card and personal loan sector together reported new business 5% lower over the same period.

Director of research and chief economist at the FLA, Geraldine Kilkelly, said: “The performance of the consumer finance market in September was in line with trends seen so far in 2023 of modest falls in the value of new business. These trends reflect the impact of the high inflation and higher interest rate environment on consumer spending which in the latest official data for Q3 2023 remained weak.

“The economic outlook is expected to remain subdued over the next year. Nevertheless, respondents to the FLA’s Q3 Industry Outlook Survey remained positive about opportunities for growth through product innovation, diversification, and leveraging technology to improve customer service.”

Across the whole consumer finance sector in September, business volumes totalled £10.07bn, comprised of £4.69bn in the credit card and personal loan sector, £4.07bn in car finance, £781m in retail store and online credit, as well as £109m in second charge mortgages.

This latest figure for the second charge mortgage sector, made up of 2,440 new agreements, was down significantly by 25% on the same month last year.

“The second charge mortgage market reported lower levels of new business in September following a particularly strong performance in the same month last year and reflecting the weaker economic outlook, added director of consumer and mortgage finance and inclusion at the FLA, Fiona Hoyle.

“The distribution by purpose of loan in September held steady with 59% of new agreements for the consolidation of existing loans, 13% 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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