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Since the credit crunch hit the UK, the overall loan market in the country has suffered, due to tighter lending criteria from loan companies and a more cautious approach towards taking on loans and other debts from consumers who are wary of the future of the UK economy.

As result of this, the loan and credit markets in general have seen a decrease in numbers an outstanding loan balances, particularly over the course of the past twelve months.

The latest figures from the Finance and Leasing Association (FLA) have shown that overall unsecured loan and credit card balances have reduced by around 3 per cent over the course of the past twelve months.

However, the number of cases of second charge lending on secured loans has actually increased by 7 per cent on a year on year basis to the end of June this year, with a total of £69 million worth of new secured loans being offered during the second three months of the year, which is an increase of 6 per cent on the same period for the previous year.

Despite this recent increase in secured loan activity, overall figures for secured loans are still lower than they were 12 months ago, showing an 11 per cent reduction in funding compared with the previous year, to just £282 million.

Lending on unsecured loans and credit cards fell by 3 per cent in June to just £4.3 billion worth of new loans and also by 1 per cent for the second quarter of the year.

Geraldine Kilkelly of the FLA said “We are still waiting for significant signs of recovery in the consumer finance and loan markets. During the last twelve months, we have seen some markets performing better than others.”

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