UK Consumers Regaining Control Of Runaway Levels Of Personal
Debt
The UK in recent years has seen a massive growth in the levels
of personal debt and thanks to increases in secured loans
corresponding to a strengthening of the housing market; it does
not appear to be slowing down Recent figures from Creditaction
show that since the end of 1993, when debt levels were around
the £400bn level, they have now risen to an astounding £1148bn,
and it is growing at a rate of 102% per annum, or £100bn over
the last year alone
Mortgage loans currently make up about 83% of the total personal
debt level following a 103% (£9563bn) increase over the past
year Both the Bank of England and the Royal Institution of
Chartered Surveyors (RICS) have reported a pick up in the
property market compared with the previous 12 months The RICS
have seen increases in mortgage approval figures, as well as the
number of prospective buyers making enquiries A spokesman for
RICS, commenting on the housing market, stated they believed,
“2006 will see the first annual rise in activity since 2002,
after three consecutive years of decline” International
property consultant, KingSturge (
residential growth in 2006, while chief economist for the
Halifax, Martin Ellis, stated, “Another year of below trend
economic growth and the continuing high level of house prices in
relation to earnings should curb housing demand and prevent a
renewed bout of high house price increases in 2006″ This will
come as good news for the many first time buyers who are
struggling to get onto the first rung of the property ladder
Consumer unsecured lending over the past 12 months has risen by
98%, which is less than the rate of secured loans According to
Bank of England figures, this represents a slight drop in
monthly credit card spending levels from October to November
Growing fears about abilities to repay the debts are seen to
have been a major contributing factor in the slowdown According
to Experian three in four Britons worry about financial
pressures during the festive season with 20% still paying off
the debts accrued over Christmas six months later
The Creditaction report has however indicated that overall
average consumer borrowing through credit cards, motor and
retail finance deals, overdrafts and unsecured personal loans,
rose to £4,121 per UK adult by the end of November 2005 The
average UK household debt was approximately £7,776 (excluding
mortgages) and £46,491 including mortgages, with the average sum
owed by each UK adult at approximately £24,636 each (including
secured loans)
The means of making payments in shops has also seen changes,
with debit cards now overtaking credit cards as the most favored
card method to account for two thirds of all plastic payments
The switch to debit cards means that shoppers gain tighter
control of their spending without wracking up greater debts
There is still more that can be done to reduce unnecessary
expenses however, with the average credit card APR at 1575%
This is about 11% higher than the base rate, and much higher
than many widely available cards as shown on the financial
comparison site Moneynet (
moneynetcouk/credit-card/indexshtml )
Following on from a history of increasing personal insolvency
rates in the UK, with the period from July to September being
the worst on record, the recent figures make for welcome
reading However whilst the current trend seems to be
progressing towards a more responsible attitude to personal debt
from both lenders and borrowers, there is still much work and
education that needs to be done
Disclaimer: All information contained in this article, is for
general information purposes only and should not be construed as
advice under the Financial Services Act 1986
You are strongly advised to take appropriate professional and
legal advice before entering into any binding contracts
Tags | buyers, debt, growth, house, increases, loans, personal, price, property, prospective, result, secured
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