The consumer finance, car finance and second charge lending markets all saw a huge year-on-year fall in new business volumes in January, research has found.
New consumer lending facilitated by members of trade body the Finance & Leasing Association (FLA) dropped by 34 per cent year-on-year to £5.68bn in January.
Within this, the retail store and online credit sector saw £607m in new business in January, down by one per cent from the first month of 2019. Meanwhile, credit card and personal loan new business fell by 40 per cent over the same period to reach £2.79bn in January 2021.
“With online sales now accounting for a record three per cent of all retail sales, it is not surprising to see the retail store and online credit sector performing well despite the UK-wide lockdown restrictions,” said Geraldine Kilkelly, director of research and chief economist at the FLA.
“A strong recovery in consumer spending is expected in the second half of 2021 supported in part by household savings.
“Our latest research also suggests that the UK consumer credit market will return to growth this year, with new business expected to increase by 13 per cent in 2021 as a whole, and the quarterly level of new credit to return to pre-crisis levels in the final quarter of 2021.”
The FLA also found that the consumer car finance market saw a 35 per cent year-on-year decline in new business volumes in January.
Other FLA figures showed there were 1,302 new agreements for second charge mortgage lending in January, a 40 per cent fall year-on-year.
This was worth £56m in new business, representing a 46 per cent drop from the same month in 2020.