Strong upward trend in consumer credit continues

Posted in 'Personal Finance' by Barry Stamp

14 June 2012

The latest figures published by the Finance and Leasing Association, (FLA), reveal a 9% increase in the amount of consumer credit taken out in April compared to the same month last year.

The FLA is a trade association of lenders operating in the consumer finance sector including banks, credit card providers, store card providers, second-charge mortgage lenders, motor finance providers, personal loan and short-term credit lenders, and instalment credit providers.

Almost all credit sectors showed an increase in April, some more than others. Car finance, second mortgages and store instalment credit each grew by 26% compared with the previous April. Credit card finance and personal loans were up by 3%. Only store card lending decreased, bucking the observed trend.

The figures continue the upward trajectory in the use of consumer credit since the beginning of the year, following relatively low growth in 2011.

Geraldine Kilkelly, Head of Research and Chief Economist at the Finance & Leasing Association, says, “April’s figures are the fourth consecutive month of overall year-on-year growth in consumer credit provided by FLA members. The car finance market has now shown strong growth for several months, and more recently we have seen a pick-up in spending using store instalment credit. It may be that we are at last seeing tentative signs of a recovery in consumer confidence.”

In 2011, FLA members provided £72.9 billion of new finance to UK businesses and households. £52.1 billion of this was in the form of consumer credit, a third of all unsecured lending in the UK. £19.9 billion of it supported the purchase of new and used cars. 64% of private new car registrations were financed by FLA members in 2011.

Barry Stamp is a co-founder of Checkmyfile and is a Chartered Banker and a Fellow of the Institute of Credit Management. He can be contacted at barry.stamp@checkmyfile.com.