More people are saving rather than spending and are shying away from using their home’s equity to fund them through the recession.

The consumer credit market, which includes secured lending, appears to have stabilised but remains down by almost £11bn on last year, according to new figures published today by the Finance & Leasing Association. Its figures show that new business written by FLA lenders, who provide both secured and unsecured loans, credit and store cards, fell by 17% in July 2009 compared with the same month in 2008.

This is good news – in these times of reduced credit and equity, for the majority it’s a time to save, and not to borrow. But it’s also good inasmuch as there are still lenders out there willing to offer people the chance to use the equity in their home to help consolidate debt, reinvest back into their property or even fund a promising investment.

Geraldine Kilkelly, chief economist at the FLA: “Our figures suggest that the rate at which consumer credit provided by our members is contracting has stabilised. But over the last year, FLA members provided £10.9bn less than they provided in 2008.”

If you think you may be one of the few who need to spend their equity more than they need to increase it, talk to a mortgage adviser right away. It may be that a secured loan is exactly what you need, but then it may be more prudent to opt for one of a raft of other financial products. The only way you can know if a financial product is right for you is talk to a professional who can give you an educated, unbiased opinion.

SOURCE: FLA, 30/09/09

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