Retail store credit increases by 3%

24 February 2009 12:04am

Lending to people buying large household items increased during 2008 despite the credit crunch, figures show.

Retail store credit, given to people buying items such as sofas and electrical goods, increased by 3% last year, with store instalment credit rising by 7%, according to the Finance and Leasing Association (FLA).

But all other areas of lending by the group's members fell during the year, with second mortgages the worst affected, diving by 64% year-on-year to £1.93 billion.

There was also a 28% drop in unsecured loans at £5.32 billion, while credit card lending was broadly unchanged at £34.49 billion.

The group attributed the resilience of store credit, which totalled £5.29 billion during the 12 months, to retailers having to offer good deals to win customers during the economic downturn.

Overall, total lending by FLA members fell by 9% in 2008 to £60.22 billion.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: "Store instalment credit performed well, as retailers respond to tricky trading conditions by offering good deals to attract customers.

"Second mortgage new business fell significantly in 2008 as a result of the difficulties facing companies trying to secure funding in the commercial markets."

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