Online lending booms as consumer lending rose by £1.5bn last year
Online lending is booming, as challenger banks and digital lenders grew their unsecured personal lending to consumers by more than £1.5bn last year.
This represents a 34 per cent year-on-year increase, and far outstrips the Bank of England’s figures for non-credit card consumer lending, which grew by just five per cent in the 12 months to December 2022.
According to new data from Freedom Finance, the value of loans requested from online lenders and the average household income of loan applicants both increased by nine per cent in 2022 compared to 2021.
Freedom Finance also noted that demand on its own platform is 50 per cent higher now than at this point last year. Much of this increase has come from new users with higher incomes seeking out personal loans.
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“Despite the worsening credit conditions at the end of last year, 2022 still saw significant increases in demand for credit on our platform and across the market,” said Emma Steeley, chief executive at Freedom Finance.
“As loan sizes increased at the same time as credit conditions tightened, we have seen new lenders serving more affluent households shopping for credit products through our proprietary technology platform.”
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Steeley added that there has also been an increase in the number of people who have missed payments in the past using the Freedom Finance platform.
“Because our soft search technology reduces the risk of people applying for loans that they are not eligible for, this is helping to protect their precious credit scores,” she added.
“These new users demonstrate the appeal that fintech platforms, like Freedom Finance, hold for increasingly savvy credit customers who are comfortable using digital tools to access the best financial products available on the market.”
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