The Money Charity has recently released figures which show Britain’s household debt has soared to a record high in excess of £1.5 trillion. The figures show Britain’s indebtedness has grown at the fastest ever pace and increased by more than £52 billion in the 12 months until the end of September 2016.
The average British adult now owes over £30,000, an increase of more than £1,000 from the same time last year. This makes it the fastest rate of debt expansion since before the credit crunch in 2008.
Average individual debt is measured by the amount owed on mortgages, loans and credit cards now accounts for over 100% of average earnings and 82% of annual economic output across Britain.
Unsurprisingly perhaps, mortgages account for the vast majority of individual debt, nearly 90%.
The Office for Budget Responsibility stated last year that it expects household debt to reach £2.55 trillion in the first quarter of 2021, amounting to average household debt of nearly £95,000.00.
Of course debt is not necessarily a negative thing and it is certainly a good way of paying for purchases that you could not afford up front. The average house price in the UK is over £200,000.00 and of course not many people have this spare to make the purchase and pay cash! Consequently mortgages enable us to buy our own homes. Other essential credit can be used to pay for things like university or a car.
Interest rates are so low at the moment meaning it is more attractive to borrow, especially if you have a good credit rating which will allow you to access the low rates of interest.
However, because interest rates are so low it is easy to think that higher levels of debt are manageable.
Interest rates won’t stay low forever though and it is always sound advice to pay down debts as much as possible whether interest rates are high or not.
If you’re struggling with debt please don’t hesitate to contact a member of our dedicated team on 0845 287 0939. Alternatively please complete the online enquiry form.