Finance & Leasing Association (FLA) members saw a year-on-year increase in new business for consumer finance, car finance and second charges in May.
Consumer finance new business rose by 116 per cent year-on-year to reach £8.38bn in May and in the first five months of the year new business was 15 per cent higher than the same period last year.
“The recovery in the consumer finance market continued in May as consumers have become more optimistic of a strong economic recovery,” said Geraldine Kilkelly, director of research and chief economist at the FLA.
“The significant growth rates reported in April and May reflect the impact on new business levels of restrictions to deal with Covid-19 during the first lockdown and we expect these to moderate in the coming months.
“Risks to the recovery remain from ongoing restrictions that may be needed to deal with the pandemic, the impact on confidence and unemployment once Government support schemes end, and increasing inflationary pressures.
“Nevertheless, we currently expect the industry to return to more normal new business levels during the second half of 2021.”
Within May’s consumer finance figures, retail store and online credit new business rose by 23 year-on-year to reach £669m and credit cards and personal loans new business increased annually by 63 per cent to £3.97bn.
There were 1,910 new second charge agreements worth £84m in May, up by 293 per cent and 309 per cent respectively from the same month last year.
“The second charge mortgage market reported a second consecutive month of growth in May, and new business volumes increased by 12 per cent in the first five months of 2021,” said Fiona Hoyle, director of consumer and mortgage finance and inclusion at the FLA.
“The improvement in consumer confidence means the market expects to see the recovery in new business continue during the second half of 2021.”
In May there were 196,534 cars purchased with car finance worth £3.33bn, up year-on-year by 237 and 385 per cent respectively.
Lending volumes for new cars rose by 514 per cent year-on-year while lending for old cars increased by 270 per cent.