Fall in unsecured credit noted by FLA

01/10/2009

Britons took out less credit in July than they did in the same month last year, new statistics indicate.

Data from members of the Finance & Leasing Association (FLA) show that overall new business, including credit card, personal loan and car loan lending, dropped by 17 per cent.

Around £10.8 billion less was found to have been lent by members over the past year, when compared with the year before.

Lending of loans where borrowers take out extra credit secured on their homes was found to have fallen by 83 per cent over the last three months.

The FLA said that, despite the declines, lending conditions have now "stabilised" following the impact of the economic downturn.

However, the organisation also warned that increasing regulations in the sector could help to limit the overall recovery from the credit crunch in the UK.

"There is a risk that if the burden of new regulation drives credit providers out of the market, consumers will be faced with a limited choice of lenders," Geraldine Kilkelly, head of research and chief economist at the FLA, added.

The International Monetary Fund said in a report released earlier this week that the UK was one of the countries facing the biggest risks of a credit shortage, with consumers finding themselves unable to secure card and loan deals on the high street.

Tags; Debt Management and Banking, Credit Card Lifestyle,

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