UK household debt, compared to the same time last year, has risen by £52billion to reach a record high of £1.5 trillion. This equates to an extra £1,046 per adult. Britons are increasing their debt at the fastest pace since before the financial crisis in 2008.
The UK adult now owes an average of £30,000. This figure is made up mostly by mortgages (87%), with unsecured debt making up the rest (13%). Loans and credit card debts make up a total of £3,737 out of the £30,000 average, with credit card borrowing playing the largest part having grown substantially in the past year. If borrowers were to make only the minimum repayment each month, it would take them over 25 years to repay the sum.
People have become more confident in borrowing due to the low inflation rate, but this is set to rise, with the Bank of England warning inflation rates are likely to rise to 2.7% in 2017. Therefore, borrowers are being urged to gain control of their debts and begin cutting back in order not to be caught out and left financially vulnerable, as more inflation means higher interest rates to be paid on mortgages, loans and credit cards.
Whilst this is a large increase, it has not come as a huge surprise as The Office for Budget Responsibility announced in July, that it predicted household debt to reach £2.55 trillion in the next five years – £1 trillion more than the current figure.
If you are in debt and struggling with repayments, especially if you have a variable mortgage, we highly recommend seeking help and taking control of your finances before inflation and interest rates rise.
To discuss your situation and receive sensible debt advice contact Clive on 01656 661426 or click here to contact him.