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Consumer lending falls once more

Consumer lending falls once more

Category: Money

Updated: 24/08/2009
First Published: 24/08/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Lending to consumers has fallen in almost all categories across the board in the last three months, with only store cards bucking the trend.

Latest figures from the Finance & Leasing Association (FLA) have revealed that new consumer credit provided by its members fell by 17 per cent in the three months to July, compared with the same period last year.

Both secured and unsecured lending have declined rapidly as lenders place ever tighter restrictions on loans.

Secured and unsecured lending markets contracted by some 84 per cent and 43 per cent respectively in the second quarter of the year, compared with the same three months in 2008.

While down on an annual basis, store cards performed well in the quarter, with new business registering a five per cent rise in June.

The FLA said the figures highlighted the importance of a proportionate response by the Government to levels of personal debt, and that a properly functioning credit market is an essential part of the UK's rise out of recession.

"In the last six months we have seen new credit levels continue to fall. The ability of lenders to make available to consumers reasonably priced credit is at risk of being hindered by a barrage of new regulation," commented Geraldine Kilkelly, head of research and chief economist.

"The FLA's members support responsible lending practices and comply with a strict code of practice to ensure that consumers are treated fairly and are able to make informed decisions when taking loans."

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