Increase in loans taken out by Brits
March 26, 2011
Over the past couple of years consumer appetite for debt has been dampened as a result of the difficult financial climate and the recession. Many people have been concerned about the security of their jobs, as well as already struggling with their finances due to existing debts and the soaring cost of living. As a result of this many have been steering clear of loans and other new debt because they might struggle to make repayments.
Another reason behind the reduction in personal loan use over the past couple of years is the drop in the number of loans being granted by lenders. Since the onset of the global financial crisis lenders have been far more careful about offering finance to consumers due to the risk of defaults, which has naturally had an impact on lending levels.
However, according to recent figures January saw the amount of consumer credit that was taken out by Brits increasing for the first time since August. This was fuelled by a jump in new unsecured loans, which soared by 27 percent year on year, with a total of £209 million in borrowing. Car finance also increased by 16 percent to £812 million and credit card lending went up by 3 percent to a whopping £2.36 billion. The figures were released by the Finance and Leasing Association.
However, data showed that consumer confidence levels remained low, and borrowing associated with High Street lending, such as store cards, remained low with a drop of 18 percent in store card borrowing.
An official from the FLA said: “In the last 12 months our members provided over £50 billion of consumer credit, but consumer confidence remains low. A sustained economic recovery is dependent on a competitive market that creates more choice for consumers.”
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