New business across the consumer finance sector grew by 2% in July compared with the same month in 2020, according to new figures published by the Finance & Leasing Association (FLA).

Across the first seven months of 2021, new consumer finance business was 15% higher than in the same period in 2020.

FLA members in the consumer finance sector include banks, credit card providers, store card providers, second charge mortgage lenders, motor finance providers, personal loan and instalment credit providers.

The credit card and personal loan sectors together reported new business up by 24% in July compared with the same month in 2020, reaching £4.1bn worth of business during the month. The sector also growth of 7% in the first seven months of 2021.

In the retail store and online credit sector, new business was up by 2% compared with July 2020 to reach £695m, and there was also growth of 11% in the first seven months of 2021.

FLA director of research and chief economist, Geraldine Kilkelly, commented: “The slower rate of new business growth reported by the consumer finance market in July largely reflects lower retail sales volumes and private new car sales.

“The second charge mortgage market and credit card finance and personal loans sectors continued to report solid new business growth as they continue to recover from record low levels last year.

“Our latest research suggests consumer finance new business by value is expected to grow by 13% in 2021 as a whole, slightly lower than previous expectations. Pent-up demand and a gradual easing of supply constraints currently hindering some sectors are expected to support further growth of 16% in 2022.”

In the second charge mortgage market, July saw £101m worth of new business, a figure up by 153% on the same month last year, when the housing market was strongly hit by the pandemic. The three months to July saw £279m worth of new business, which was 217% higher than the same period in 2020.

Commenting on the second charge mortgage figures, FLA director of consumer and mortgage finance and inclusion, Fiona Hoyle, added: “The strong recovery reported by the second charge mortgage market in recent months continued in July as new business reached its highest level since February 2020. We expect to see further growth this year as the market returns to pre-pandemic levels of new business.”

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