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Peer2Peer Finance News | September 18, 2019

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Specialist lending softens in June amid weaker business demand

Specialist lending softens in June amid weaker business demand
Emily Perryman

ACTIVITY in the specialist lending markets softened in June, driven by a weaker appetite for business investment.

In the asset finance sector, lending volumes declined three per cent year-on-year to £3m in June, but gained five per cent year-on-year in the second quarter, according to figures from the Finance & Leasing Association (FLA).

It follows a strong 10 per cent increase in asset finance new business the previous month, driven by new finance for equipment in the construction, manufacturing and agricultural sectors.

John Cronin, financials analyst at stockbroker Goodbody, said the slowing growth is reflective of the weaker appetite for business investment.

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In the second charge mortgages sector, meanwhile, the value of lending plunged six per cent in June and dipped two per cent in the second quarter. Second charge mortgage repossessions remained low, falling by 2.6 per cent in the second quarter.

The consumer finance sector performed more strongly, with lending up nine per cent in June and 14 per cent in the second quarter. The main drivers were credit cards and personal loans, and car finance, both of which saw lending rise by 10 per cent during the month.

Cronin said that while consumer finance was the one bright spot, this is “perhaps worrying in a credit context given the clearly weakening macro backdrop”.

Geraldine Kilkelly, head of research and chief economist at the FLA, added that the consumer finance new business figures reflect wider economic trends, with the World Cup and hot weather providing a further boost to retail sales.

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The FLA figures show point of sale consumer new car finance business volumes grew by one per cent in June, while the value of new business was up by nine per cent. In the used car finance market, new business was up four per cent by volume and 11 per cent by value.