Consumer finance new business grew by 1% in January

New figures released by the Finance & Leasing Association (FLA) show that consumer finance new business grew by 1% in January 2023 compared with the same month in 2022. In the twelve months to January 2023, new business was 10% higher than in the same period in 2022.

The retail store and online credit sector reported new business up by 11% in January compared with the same month in 2022, while the credit card and personal loan sectors together reported new business growth of 3% over the same period.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said “The consumer finance market reported modest growth in January, following two consecutive months of contraction in new business. The strong performance by the retail store and online credit sector reflected retail sales promotions after Christmas.”

“In the first half of 2023, household expenditure is likely to remain relatively weak as pressures on household incomes from high inflation, and higher interest rates and taxes continue. FLA’s latest research suggests that the value of new consumer credit in the UK is likely to grow by around 1% in 2023 as a whole.”

“As always, customers who are worried about meeting payments should speak to their lender as soon as possible to find a solution.”

Andrew Fisher, Chief Growth Officer at Freedom Finance said “The consumer credit market saw slight growth at the start of 2023 as people continue to battle high energy bills and the impact of soaring inflation.”

“The retail store and online credit sector experienced a particularly strong start to the year as shoppers hit the January sales. Embedded finance is revolutionising this market by supporting customers with credit products where and when they need it through the touchpoints of the digital customer journey.”

“The latest Bank of England data encouragingly suggests that the cost of consumer credit may have peaked, with average rates across personal loans and credit cards both declining at the start of 2023 after significant increases in the last year. As cost-of-living pressures recede through 2023, we could see expenditure and consumer confidence rebound driving further growth in the lending market.”

“For consumers, the most important thing when shopping for loan products is to utilise all the available tools and technology to get a deal that suits their individual circumstances. This involves shopping around and comparing different products. Soft-search technology and digital marketplaces can help consumers with this by excluding products they are not eligible for to avoid declines while extra data from open banking providers may even change a customer’s risk profile, opening up more products.”

	Jan 2023	% change on prev. year	3 months to Jan 2023	% change on prev. year	12 months to Jan 2023	% change on prev. year
Total FLA consumer finance (£m)	8,947	1	26,664	-3	114,643	10
Data extracts:
Retail store and online credit (£m)	741	11	2,920	5	9,915	8
Credit cards & personal loans (£m)	4,657	3	13,883	-4	58,343	14
Second charge mortgages (£m)	103	14	333	9	1,570	37
Car finance (£m)	3,133	-5	8,641	-5	40,579	5