On top of year-on-year growth in customers, there was also a one per cent rise in the volume of credit being taken out by borrowers.
The home credit market is currently under investigation from the Competition Commission after the National Consumer Council (NCC) lodged a super-complaint with the Office of Fair Trading.
Janice Allen, a spokesperson for the NCC, said that the borrowers most likely to use home credit – low and unpredictable earners requiring essential items – felt that this form of credit most suited their needs.
“There is a problem with this market because it seems to be very expensive on the one hand. On the other hand, it does meet their needs,” she said.
“Some lenders are making excessive returns. So it could be possible to have a more affordable version of home credit.”
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Debt resolution specialists, ClearDebt, warned debtors to think incredibly hard before taking credit from doorstep lenders.
“Just six companies dominate the home credit market, with Provident Financial currently accounting for half the market,” explained ClearDebt chief executive, David Mond.
“Customers value home credit because it seems to suits their needs well but they are paying too much for it, because of the lack of competitive pressure in the market.
“These customers would be better using the facility of their local credit union where they could save money on a regular basis but also borrow money at a very low rate of interest without the need for a credit check.”
In the mainstream credit market, competition between lenders and the choice available for customers are the main factors in keeping APRs low.
However, ClearDebt believes these market forces are almost non-existent in the home credit market, resulting in high APRs and a lack of choice for customers.
Mr Mond continues: “There’s a catch 22. Mainstream loans and credit cards are not an option for customers who use doorstep lenders and, until mainstream lenders are willing to enter the market, the main players’ high APRs will remain unchallenged.”
A typical example of an unsecured loan with Provident Financial would be the following:
Loan amount: £300
55 weekly repayments of £9
Total amount payable £495
Typical 177% APR
Mr Mond asks: “Is this a fair deal for the consumer who is already in financial difficulty?”
The Competition Commission is due to publish its results on the home credit market in the autumn.