The rate of secured loans being taken out by borrowers, have been seen to be dropping sharply. However at the same time in-store credit appears to be on the rise. Lending volumes continued to decline in March, a major industry association has shown.

Latest data from the Finance and Leasing Association (FLA) found that consumers were able to extend 12 per cent less credit over the month, compared to March 2008 levels.

This reduction is due to the global credit crunch, which has made banks and other lenders less willing to allow people seen as "high risk" to borrow money.

Results from the report show that different borrowing methods have been disproportionately hit by the economic downturn. One example was secured loans - where extra credit is borrowed against equity in a property - are 76 per cent down on the year, while credit cards suffered a fall of just three per cent.

Elsewhere, unsecured loans declined by 37 per cent - but in-store credit from retailers defied the downturn and rose by 24 per cent.

Speaking about the research, Geraldine Kilkelly at the FLA, said: "Overall, consumer finance is still being hit by the downturn. With a depressed housing market many people are choosing to improve their homes and replace furnishings rather than move house. Retailers and lenders have been offering attractive interest-free credit and deferred payment deals on store instalment credit."