Demand for personal loans continues to grow
DEMAND for consumer credit continued to boom in June as personal loan and credit card providers reported a 10 per cent boost in business compared with the same month last year.
Figures from the Finance and Leasing Association (FLA) shows there was £3.8bn of new credit card and personal loans business during June.
The data shows £46bn has been provided in loans and credit cards in the 12 months to June, up seven per cent compared with the 12 months to June 2016, while £11.7bn was borrowed in the three months to June, an eight per cent increase year on year.
“In the first half of 2017, consumer finance new business grew by five per cent compared with the same period in 2016, in line with modest single-digit growth expectations for the year as a whole,” , Geraldine Kilkelly, head of research and chief economist at the FLA, said.
The update follows concerns raised by the Bank of England about the boom in consumer credit, which it has addressed by increasing capital that banks must set aside for losses.
The central bank’s financial stability report showed consumer credit, comprising credit cards, personal loans and motor finance, grew by 10.3 per cent in the 12 months to April 2017, which it described as “markedly faster than nominal household income growth.”
The report warned that while loss rates on consumer credit were currently low, banks had used lower risk criteria to calculate the capital buffer they needed to set aside for these types of loans.
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