The effects of the credit crunch and recent recession in the UK have had a profound impact on the personal loan market, both in forcing lenders to restrict the amount and number of loans they offer to customers and also making consumers far more wary of borrowing money and therefore taking a more cautious approach to applying for a new personal loan.

As a result of this, the latest figures from the Finance and Leasing Association (FLA) have shown a significant reduction in the amount of new loans offered to borrowers over the course of the past twelve months.

The figures from the FLA show that, overall new lending dropped by around 17 per cent over the last three months, compared with the same period for last year. The worst hit areas were unsecured and secured loans, with sales of unsecured loans falling by 43 per cent and secured loans by a staggering 84 per cent during the second three months of this year, compared with twelve months previously.

Geraldine Kilkelly of the FLA said “In the last six months we have seen new credit levels continue to fall. The ability of lenders to make available to consumers reasonable priced credit is at risk of being hindered by a barrage of new regulation. The FLA’s members support responsible lending practices and comply with a strict code of practice to ensure that consumers are treated fairly and are able to make informed decisions when taking loans.

But the wave of new regulation from the Government and Brussels could jeopardise lenders’ ability to make available the credit that will undoubtedly be needed to support a sustainable economic recovery.”