UK consumer lender Fluro has launched the second edition of its “Consumer Lending Newsflash”, examining current trends across the entire UK open market, encompassing major price comparison website partners.

The data shows that there was a 22% uplift in consumers making loan requests during April 2023, compared to the same period last year.

As the cost of living squeezes personal finances, growing numbers of consumers are looking to consolidate their debts or shift spending behaviours. Compared to the same period last year, Fluro’s data shows a 45% increase in loans requested for debt consolidation purposes. Additionally, holiday loan requests have seen a 69% increase in April year on year, suggesting that consumers are determined to make the most of their post-pandemic freedoms, despite the high levels of inflation in air travel and accommodation prices.

There was a 29% year-on-year rise in loans requested amongst homeowners with a mortgage last month, likely a response to the challenges posed by rising interest rates. The ONS has said that 1.4 homeowners have fixed-rate mortgage deals expiring this year; these households are facing significant hikes in their monthly repayments. There has also been an 18% year-on-year increase in renters requesting loans. The most recent figures from Zoopla show that rental inflation is currently running at over 11%.

Fluro’s data shows that demand for loans has risen fastest amongst lower-income households, but that the trend is present across the economic spectrum. There was a 195% increase in loans requested by people earning less than £1,000 per month year on year. During the same period, there was a 27% increase in loan requests from people earning between £72,000 to £84,000 annually, over double the UK average salary.

A closer look at the data reveals that people who are divorced, separated or widowed were far more likely to apply for a loan, with increases of 144%, 286% and 88% respectively. Individuals who are divorced, separated or widowed often live in single-income households, meaning that their housing costs are relatively higher when compared with people who are married or living with a partner. They are therefore generally more vulnerable to rising interest rates and rental prices.

Nick Harding, Co-Founder & CEO, Fluro, said: “Consumers have been enduring incremental price rises for over a year now, but in the case of housing, one huge hike is only just coming on stream at scale. We shouldn’t underestimate the impact this will have on personal finances over the coming months. Housing is by the far the biggest monthly expense for most people.

“In response, it can be smart for consumers to use loans to consolidate debts into one simple monthly payment and to reduce their interest rate costs.  However, our data also shows that many are attempting to use loans as a way of maintaining lifestyles, which have become unaffordable. We wouldn’t recommend taking out a personal loan to fund a holiday for example, but there has been a surge in demand for this type of credit.

“In this environment, lenders need to support customers who have fallen into difficulty, but they also need to adapt their underwriting criteria to ensure that they only lend to those who are able to pay it off.”