New figures released by the Finance & Leasing Association (FLA) reveal that consumer finance new business grew by 9% in April 2024 compared with the same month in 2023. This growth marks a notable increase in consumer confidence and financial activity, highlighting the resilience of the consumer finance market amid economic fluctuations.
Key Growth Figures
In the first four months of 2024, new business in the consumer finance market increased by 2% compared with the same period in 2023. This upward trend is primarily driven by the credit card and personal loans sectors, which together reported an 11% increase in new business in April 2024 compared to April 2023. Conversely, the retail store and online credit sector experienced a 3% decline in new business over the same period.
Sector Breakdown
- Credit Cards and Personal Loans: The credit card and personal loan sectors showed significant growth, with new business rising by 11% in April 2024 compared to the same month last year.
- Retail Store and Online Credit: This sector saw a 3% decrease in new business, reflecting a shift in consumer borrowing preferences.
- Second Charge Mortgages: There was a notable increase in new business for second charge mortgages, which grew by 40% in April 2024 compared to the previous year.
- Car Finance: The car finance sector experienced a 7% increase in new business in April 2024, maintaining steady performance.
Industry Commentary
Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, commented on the latest figures:
“The strong performance in April can in part be attributed to a shorter working month in April 2023 due to the timing of Easter. There has also been a significant improvement in consumer confidence with better news on inflation and the prospect of lower interest rates leading to greater optimism about personal finances.”
Kilkelly emphasized the importance of upcoming interest rate decisions:
“The General Election campaigns are in full swing but for many households the key to maintaining confidence will be a reduction in interest rates in the second half of 2024. Our latest research suggested that the UK consumer credit market would see single-digit growth in the value of new business in 2024 of around 4% compared with 2023.”
Advice for Consumers
As consumer finance continues to grow, Kilkelly advised customers who are worried about meeting payments to speak to their lenders as soon as possible to find a solution. This proactive approach can help consumers manage their finances effectively and avoid potential financial difficulties.
Future Outlook
The positive trends in the consumer finance market are expected to continue, driven by improving consumer confidence and economic conditions. However, the sector must remain adaptable to changing market dynamics and regulatory environments.
