The total new lending figure for the year ending in March was £58 billion, some 13% down on the previous year.
Within the total, there are some marked differences. Secured loans fell by 76% in March compared with the same month last year, reflecting the continued problems lenders in that market have in accessing wholesale funds. By contrast, new credit card business was down just 3% compared with March 2008.
In-store credit, which accounts for 1.5% of the credit market, was up by 24% in March (to £230 million) compared with the same month in 2008, and by 9% in the year ending in March. Store instalment credit is a popular way to pay for household furnishings or electrical items. Purchases are usually for relatively small amounts and many good deals are available.
Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said: "Overall, consumer finance is still being hit by the downturn. With a depressed housing market many people are choosing to improve their homes and replace furnishings rather than move house. Retailers and lenders have been offering attractive interest-free credit and deferred payment deals on store instalment credit.
We have seen a similar trend in recent months in the motor market. The proportion of car sales represented by instalment-type credit available in the dealerships has grown from 48% to 54% over the last year. This is mainly a response to competitive pricing and reduced availability of other sources of credit."
