Annual personal debt growing by ten per cent

By staff writers
November 16, 2006

Annual personal debt growing by ten per cent

-16/11/06

By Mark Porthouse

Figures released by Christian-based charity Credit Action show that the onward march of personal debt has increased at an annual growth rate of 10.3%.

In September UK personal debt went past the £1.25 trillion mark for the first time.

Lending secured on homes has increased by 11.2% over the last 12 months and consumer credit lending was up by 6.3% (over the year) to £212.0bn. The average household mortgage stands at around £42,000 (including households with no mortgage) ñ a substantial increase over the last ten years. The average amount owed by every individual in the country rose by around £225 during September, heading towards unsustainable levels.

Each household pays, on average, about £3,200 per year on interest.
Credit Actionís November release also points out that, in 2005, each adult in the UK received about 27 enticements to take on new credit. This figure is derived from marketing mails sent by finance companies and banks and does not include other advertising.

Credit Action also point out that the Financial Services Authority (FSA) state that ìover one third of couples are kept awake at night worrying about their money situationî.

These figures come after the release of many reports and surveys outlining the deepening debt crisis in the UK which, whilst insolvencies are climbing, has yet to see its peak.

Recently Datamonitor reported that UK personal debt is double the Western European average. The Citizens Advice Bureau has reported that it was dealing with 118% more debt problems than ten years ago.

This problem is not merely a numbers one. An AXA report has shown that it affects people's well-being and health as well. Thomas Charles, a debt consultancy, has released a survey showing that the recent Bank of England interest rate rise could push 1.1 million people to the brink of insolvency.

Whilst the money markets are predicting a further increase in rates in 2007, the worst case scenario, where the BoE has to counter yet higher inflation (as shown within the limits of it's inflation projections) with still higher interest rates, could mean that rates have to rise above market expectations to ensure that it's price stability (inflation) target set by the Chancellor of the Exchequer is met.

Ann Pettifor, of the New Economics Foundation and a founder of the Jubilee 2000 debt movement, recently pointed out the dangers to the world economy of the ongoing US housing slump. She pointed out that the UK credit boom has lead to an asset bubble in housing which could easily collapse alongside the credit bubble.

Abbey (a bank and one of the UK's biggest mortgage lenders) has just announced new mortgage lending criteria to enable people to borrow amounts up to five times joint salary, the effect of which will aid the continued expansion in credit levels secured on UK homes and as a result tend to inflate housing asset prices.

Credit Action is a Registered Charity loosely linked with the church and is committed to helping people manage their money.

Annual personal debt growing by ten per cent

-16/11/06

By Mark Porthouse

Figures released by Christian-based charity Credit Action show that the onward march of personal debt has increased at an annual growth rate of 10.3%.

In September UK personal debt went past the £1.25 trillion mark for the first time.

Lending secured on homes has increased by 11.2% over the last 12 months and consumer credit lending was up by 6.3% (over the year) to £212.0bn. The average household mortgage stands at around £42,000 (including households with no mortgage) ñ a substantial increase over the last ten years. The average amount owed by every individual in the country rose by around £225 during September, heading towards unsustainable levels.

Each household pays, on average, about £3,200 per year on interest.
Credit Actionís November release also points out that, in 2005, each adult in the UK received about 27 enticements to take on new credit. This figure is derived from marketing mails sent by finance companies and banks and does not include other advertising.

Credit Action also point out that the Financial Services Authority (FSA) state that ìover one third of couples are kept awake at night worrying about their money situationî.

These figures come after the release of many reports and surveys outlining the deepening debt crisis in the UK which, whilst insolvencies are climbing, has yet to see its peak.

Recently Datamonitor reported that UK personal debt is double the Western European average. The Citizens Advice Bureau has reported that it was dealing with 118% more debt problems than ten years ago.

This problem is not merely a numbers one. An AXA report has shown that it affects people's well-being and health as well. Thomas Charles, a debt consultancy, has released a survey showing that the recent Bank of England interest rate rise could push 1.1 million people to the brink of insolvency.

Whilst the money markets are predicting a further increase in rates in 2007, the worst case scenario, where the BoE has to counter yet higher inflation (as shown within the limits of it's inflation projections) with still higher interest rates, could mean that rates have to rise above market expectations to ensure that it's price stability (inflation) target set by the Chancellor of the Exchequer is met.

Ann Pettifor, of the New Economics Foundation and a founder of the Jubilee 2000 debt movement, recently pointed out the dangers to the world economy of the ongoing US housing slump. She pointed out that the UK credit boom has lead to an asset bubble in housing which could easily collapse alongside the credit bubble.

Abbey (a bank and one of the UK's biggest mortgage lenders) has just announced new mortgage lending criteria to enable people to borrow amounts up to five times joint salary, the effect of which will aid the continued expansion in credit levels secured on UK homes and as a result tend to inflate housing asset prices.

Credit Action is a Registered Charity loosely linked with the church and is committed to helping people manage their money.

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