Unemployment fears 'hitting personal loans'

30/04/2009

Unsecured loan borrowing has fallen sharply in the UK, as unemployment fears make consumers wary about locking themselves in to long-term repayment schedules.

This is the main finding of new research from the Finance and Leasing Association (FLA), which released end-of-year credit figures yesterday.

The industry group said that total finance provided to consumers over the year to February 2009 hit £58.2 billion.

Not only is this a 12 per cent fall over February 2007-February 2008, but it includes a 30 per cent fall in unsecured lending.

Over recent months, the jobless total has been steadily rising as the UK falls into recession.

Latest government figures show that unemployment hit a 12-year high of 2.1 million at the end of February.

Geraldine Kilkelly, head of research and chief economist at the FLA, added: "Rising unemployment and low consumer confidence have led to a further drop in unsecured loan new business in the last two months.

"Our figures show that FLA members have written £660 million-worth of new unsecured loan business in the first two months of 2009, compared with £1.1 billion in the same period last year."

Tags; Debt Management and Banking, Credit Card Lifestyle,

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