The cold snap in January and the increased VAT rate contributed to a dip in consumer finance new business, which was 13% lower than in January 2009. Even store instalment credit, which has held up well throughout the recession, saw a small decline.
Unsecured loans have almost halved over the past 12 months and the second mortgage market was down by 82% over the same period.
Fiona Hoyle, FLA head of consumer finance, said: “We have seen a slow start to the year in terms of new business, but affordable credit will play an important part in supporting the economic recovery in the coming months. It is important that the main parties do not make a political football of the credit markets, by proposing further reforms without fully understanding the consequences. Lenders will shortly introduce a raft of new consumer rights for credit and store cards, together with other credit products, which will give customers even more control over their borrowing.”