The Finance & Leasing Association (FLA) has reported growth of 9% in consumer finance new business in 2016.
The FLA also said that new business in December grew by 2% compared with the same month in 2015.
Second charge mortgage new business grew 4% by value in 2016, while volumes fell by 6%.
Credit card and personal loan new business together grew by 8%, while retail store and online credit new business was up by 2% over the same period.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The growth in new business across all of the main consumer finance products in 2016 reflected growth in household expenditure, the key driver of the UK economy last year.
“Despite significant challenges faced by the second charge mortgage market in 2016 as it adjusted to the Financial Conduct Authority’s MCOB regime, new business volumes were only modestly lower than in 2015.”
Harry Landy, sales director of Enterprise Finance, said: “Today’s FLA figures show marginal growth of just 4% year-on-year of annual lending. With the economic uncertainty in the back-end of 2016 which saw the market stutter, and the disruption of MCD implementation, it is perhaps not surprising.
“However, given that some pre-MCD predictions anticipated a major growth surge after regulation – through more brokers embracing second charges – 4% is ultimately disappointing. We believe that many brokers still need to understand the role second charge mortgages can play for some clients, in order to participate in the market and unlock growth. Enterprise will certainly be continuing our programme of broker education to deliver that outcome.
“Nevertheless, we believe there is cause for optimism in 2017 because the quality of second charge mortgages being issued is much better. This is reflected in the fact repossessions are down considerably from last year. Additionally, the Bank of England has increased the UK’s predicted GDP growth to 2% from 1.4%, showing a heightened positive outlook overall.
“More brokers need to be aware of the benefits of second charge mortgages, which are ideal for navigating choppy waters, but the market is a good place for the coming year.”