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Consumer lending dips in 2009
Wednesday 24th February 2010The latest figures from the Finance & Leasing Association have shown that new consumer lending fell by 15% during 2009, compared with the previous year.
The drop has been put down to the scarcity of funding and the increased costs of borrowing, as last year saw more and more customers unable to meet repayments and having to default on personal loans and credit card debts.
The trade body stated that second charge mortgages and personal loans suffered the biggest declines in popularity, as consumer confidence plummeted amongst rising unemployment and the general doom and gloom of the economy.
Kevin Still, director at debt solutions provider EuroDebt, said that the figures weren’t surprising, adding: “It is not just that people are avoiding long-term credit commitments, it is also the case that many consumers don’t meet the tough lending criteria being imposed. Any adverse credit will affect ability to get new credit and the interest rate applied.”
He went on to say: “Clearing debt has been a priority for many, unfortunately the evidence is that those with no disposable income are having to use store cards and credit cards to make essential purchases. Credit card debt is now very topical, especially with many providers increasing their interest rates massively. We expect to see a rise in non-borrowing debt solutions like Debt Management Plans (DMPs) and Individual Voluntary Arrangements (IVAs) because many indebted consumers are only servicing interest on their credit cards and the balances are not reducing.”
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