New business in the consumer finance space fell by 4% in March compared with the same month in 2022, new figures published by the Finance & Leasing Association (FLA) have shown.

For the first quarter as a whole in 2023, new business was down 2% compared to Q1 last year.

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.

The latest figures from the FLA revealed that the retail store and online credit sector reported new business up by 5% in March compared with the same month in 2022, while the credit card and personal loan sectors together reported a fall in new business of 3% over the same period.

Director of research and chief economist at the FLA, Geraldine Kilkelly, commented: “Our latest figures suggest that both the consumer finance market and households have remained resilient despite the challenges posed by high inflation, and higher interest rates and taxes.

“CPI inflation is expected to fall significantly in the coming months, but further rises in bank rate are likely while concerns over domestic price pressures persist. We therefore expect households to remain cautious when it comes to discretionary spending, and the consumer credit market to hold steady in 2023 as a whole.

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

The FLA’s latest figures for the second charge mortgage sector revealed that £123m worth of new business was carried out in March, a total made up from 2,745 new agreements. These figures represented falls of 12% and 10% respectively, when compared to the same month in 2022.

Director of consumer and mortgage finance and inclusion at the FLA, said: “March saw the second charge mortgage market report its highest level of new business so far this year and the first quarter ended with new business volumes only 5% lower than in Q1 2022.

“The distribution by purpose of loan in March showed 58% of new agreements were for the consolidation of existing loans, 14% for home improvements, and a further 22% 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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