Consumer borrowing falls again

Consumer borrowing continued to fall during October, driven by a sharp drop in high street lending, figures suggested yester- day.

Total lending by members of the Finance & Leasing Association fell to 3.93bn during the month, 8 per cent less than in October 2009.

But far bigger falls were recorded in some areas. Borrowing through store cards was down 33 per cent year on year to 145m and store instalment credit dropped by 27 per cent to 152m.

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Credit card borrowing was 7 per cent lower than a year earlier, although at 2.36bn it was still the single largest area of lending.

Borrowing through second mortgages, under which people can take out loans secured against their home, dropped by 20 per cent to 24m.

Car finance was 3 per cent lower at 983m.

The only area of lending which increased during the month was direct unsecured loans, up 4 per cent to 199m.

The association said retail credit was an important factor in any economic recovery.

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Fiona Hoyle, FLA head of consumer finance, said: "The latest figures show a continued decline in most types of consumer credit, and particularly for store cards and in-store credit.

"We hope the Government will therefore think very carefully before imposing any further regulatory restrictions on these mar-kets.

"For example, interest-rate caps on credit and store cards and cooling-off periods for store cards could drive some lenders out of the market and further reduce access to affordable credit."

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