New business volumes across consumer finance fell year-on-year by 2% in May, new figures published by the Finance & Leasing Association (FLA) have indicated.

Over the first five months of 2024, however, business across the market is up 1% when compared to last year.

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.

In the most recent data covering May, the credit card and personal loans sectors together reported new business 2% lower compared with the same month in 2023, while the retail store and online credit sector reported a fall in new business of 7% over the same period.

Director of research and chief economist at the FLA, Geraldine Kilkelly, said: “The consumer finance market has reported modest growth in new business in 2024 so far despite the subdued performance in May. Consumer confidence overall continues to strengthen although this has yet to translate into a significant pick-up in confidence about making big-ticket purchases.

“Our latest research suggested that total UK new consumer credit by value would grow in 2024 by 4% compared with 2023, supported by better news on real earnings and the prospect of lower interest rates.”

In the second charge mortgage market, £142m worth of new business was carried out in May, a figure up 18% on the same month last year. This was comprised of 2,957 new agreements, a total that represented a 12% annual rise.

Commenting on the second charge mortgage market, director of consumer and mortgage finance and inclusion at the FLA, Fiona Hoyle, added: “May saw the second charge mortgage market report its highest level of new business by value since October 2022. The market has reported a sustained period of growth leading to new business growth of 20% by value and 14% by volume in the first five months of 2024.

“The distribution of new business by purpose of loan in May 2024 showed that the proportion of new agreements which were for the consolidation of existing loans was 59.8%; for home improvements and the consolidation of existing loans was 23.7%; and for home improvements only was 11.5%.

“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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