Cautious consumers turn to in-store credit

Latest industry figures from the Finance & Leasing Association (FLA) show that consumers are continuing to take a cautious approach to spending. Only the store instalment market is bucking the trend with an 8% increase in new business in the last three months.

Overall, consumer credit provided by FLA members fell by 18% in May compared with the same time last year. This is consistent with trends reported by our members in recent months. Access to credit has been adversely affected by the lack of liquidity across many parts of the market, especially secured loans which include second charge mortgages. The secured loan market is down 85% compared with May 2008.

Geraldine Kilkelly, Head of Research and Chief Economist at the FLA, said: "Access to wholesale funding remains a problem for lenders. And with lower average earnings' growth and a higher risk of unemployment, consumers are thinking carefully before taking on further credit commitments. Store instalment credit allows customers to borrow in a very controlled way for a particular purchase, with repayments being easily planned within their household budget."