New figures released by the Finance & Leasing Association (FLA) show that consumer finance new business in August grew by 10% compared with the same month last year.

Credit card and personal loan new business together grew by 9% compared with August 2017, while retail store and online credit new business increased by 7%. Second charge mortgage new business fell 2% by value and grew 6% by volume over the same period.

Commenting on the figures, Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said “Growth in consumer finance new business in August reflected a strong retail sales performance over the same period. In particular, the value of retail sales made by household goods stores grew at its strongest monthly rate for more than a decade.”

Asia Anwar, account director – lending, TransUnion (formerly Callcredit) said “According to the latest figures from the Finance & Leasing Association (FLA), consumer finance new business saw an overall increase of 10 percent in August, compared with the previous year. This has been partly attributed to the strength of retail sales of household goods, which saw its strongest monthly growth in over a decade and strikes a positive note amongst the current concerns about the UK retail sector. Consumer buying patterns are changing, of course, with the online marketplace now such a powerful force, but it’s heartening to see an uplift in August which is typically a quieter month.”

“This aligns with the recent ONS statistics which showed retail sales volumes had risen 0.3 per cent in August, outperforming expectation, with household goods stores up 5.8 per cent and non-store retailing up 12.8 per cent. With retail sales accounting for a fifth of the economy, this bodes well for continuing improvement in the coming months.

“However, it’s important that businesses continue to do all they can to ensure consumers don’t overextend themselves financially, by carrying out robust affordability checks, so that whether it’s credit cards, loans or store cards, responsible lending is the priority.”

Table 1: New consumer credit lending

Aug 2018

% change on prev. year

3 months to Aug 2018

% change on prev. year

12 months to Aug 2018

% change on prev. year

Total FLA consumer finance (£m)

8,172

+10

25,515

+9

102,751

+8

Data extracts:

Retail store and online credit (£m)

708

+7

2,175

+5

9,375

+9

Credit cards & personal loans (£m)

4,423

+9

13,274

+10

51,469

+9

Second charge mortgages (£m)

92

-2

282

-1

1,022

+2

Car finance (£m)

2,517

+14

8,607

+12

36,772

+8