|
|
£1,065bn is the total UK debt at the end of January
2005. The growth rate remains strong at 12.6% for the previous
12 months giving us £116bn to start this year with,
more than we had at the start of 2004, which was the largest
single-year rise in debt since the opening of the Bank of
England.
Total mortgage debt in 2004 rose to £101 billion. This
is more than the complete net mortgage lending in the five
years from 1994 to 1998 combined, at £99bn.
Total consumer credit lending to individuals in January 2005
was £183.6bn. Our unsecured debt (including personal
loans, credit, loyalty and store cards etc...) increased by
£15bn in 2004.
Average household debt in the UK is approximately £7,494
(excluding mortgages) and £43,488 including mortgages.
Average owed by each person in the UK is roughly £17,891
(including mortgages).
Research by Datamonitor shows consumer borrowing via credit
cards, motor and retail finance deals, overdrafts and unsecured
personal loans has risen to £4,004 per average UK adult
at the end of 2004 (£1,302 on credit cards, £1,892
on unsecured personal loans and £812 on overdrafts and
motor and retail finance deals). This figure translates into
a 10% increase on the previous year's levels and a 45% increase
since 2000.
The Bank of England has noted that the total borrowing this
year has increased households’ debt to 140% of aggregate
income - above United States and most large European countries.
The total credit card debt in January 2005 was £54.1bn.
The British public expect to spend roughly £730 on credit
cards over the next quarter of the year, a marked 30% decrease
from the £1,036 they planned to spend in the last 3
months of 2004, according to the latest statistics from the
Morgan Stanley card index. This is the lowest level recorded
since the index began four years ago.
During December 2004, according to the banking industry, spending
on plastic cards reached £269 billion for the year,
overtaking cash payments, which were around £268 billion.
There are eight million more credit cards in the UK than people,
according to research from Datamonitor. The firm counted 67
million cards in 2003 - compared with around 59 million people
in the country - and has declared the country officially "addicted"
to plastic. The UK accounts for over 55 per cent of the 155
million credit cards in circulation in Western Europe, having
overtaken Germany to become the most card intensive country
in Europe.
More than half a million people may have crippling debts on
their credit cards, MPs were told in October. The massive
problem was revealed when credit card chiefs were grilled
by senior MPs. The bosses admitted that between one and four
per cent of customers were in severe financial difficulties.
Members of the powerful Commons Treasury committee —
which is probing credit card charges and marketing —
estimated that this meant more than 500,000 people have huge
balances which they are struggling to pay off.
More than one in ten people
have problems meeting their credit card debt repayments.
Cards in issue have now reached 160.6m which is a growth of
13 million cards in 12 months. The average adult now has 3.5
plastic cards with 246 card transactions taking place every
second in the UK in 2003.
Round about a half of the people who take out credit in shops,
hadn’t planned to do so when they left home.
Data recorded by the Consumer Credit Counselling Service and
Age Concern shows that, excluding mortgages, those in their
50s owe an average of 1.69 times their net annual income,
compared to 1.19 for the under-50s. The rate of growth of
this debt has been faster among those in their 50s in the
past five years - 20 per cent, compared with 4 per cent for
the under 50s.
Personal insolvency cases being handled by PKF in Scotland
have increased over the last year by 10%, and around 60% of
recent cases involved young people aged under 30. Levels of
debt among this age group ranged from £7,000 to nearly
£60,000. Bryan Jackson, managing partner at PKF’s
Glasgow office, said all of those aged 20-30 being declared
bankrupt were in full-time employment and blamed the statistics
on their "living for today" mentality. "Society
is becoming increasingly materialistic and consumer-led,"
he said. "Young people, in particular, are living for
the moment and are using credit cards and loans to enhance
standards of living.
The burden of debt for CCCS clients increased dramatically
during 2004, according to the charity's latest figures. Over
the year the average debt burden of clients making repayments
through CCCS increased by nearly £2000. The average
debt amount increased from £21,660 at the beginning
of 2000 to £26,800 at the end of December 2004
According to the FSA Financial Risk Outlook 2005 over a quarter
of families have at least one credit card where the outstanding
balance is not cleared each month, owing nearly £2,500
on average (14% higher than last year). Student Loan Company
outstanding debt rose sharply, and is now 27% higher than
in 2003.
A survey for Sainsbury's Bank found that more than six million
people estimated that they would still be paying off Christmas
shopping in March. A further 168,000 admitted that credit
card debts accumilated whilst buying gifts for the holiday
is likely to take up to a year to repay!
More people are receiving help with their financial
problems
The positive side is that more people are seeking help with
debt, and that more help is available:The Consumer Credit
Counselling Service (CCCS) said calls in December were up
by 77% on the same month in 2003. CCCS said it had received
more than 1,000 calls on 4 January, the first working day
after the Christmas and New Year break, the most calls it
has received in one day. Debt Free Direct said it received
275% more calls per day in December than a year before. Calls
are running at almost double the rate of last January. Rising
interest rates were blamed for 28.5% more people falling into
bankruptcy over the summer than at the same stage of 2003.
Government figures revealed a total of 9,156 people were made
bankrupt in England and Wales during the three months to the
end of September 2004 - 4% higher than the previous quarter
Top 3 reasons quoted by debt
sufferers
In both a household survey and a survey of CAB clients, the
top three reasons quoted by those suffering debt problems,
were:
1) a sudden change in personal circumstances – typically
from job loss, relationship breakdown or illness;
2) a low income – the consequences of living for a long
time on a low level of income
3) over-commitment – in some cases related to money
mismanagement. The number of consumer debt problems dealt
with by Citizens Advice Bureaux has risen by nearly 75% over
the last seven years, figures released by the national problem-solving
charity reveal: Consumer debt issues seen in bureaux stood
at 706,700 in 2003/4 compared with 405,800 in 1996/7 –
a rise of 74%. Bureaux dealt with nearly 1.1 million debt-related
issues last year, a figure that also includes housing, utilities
and benefits-related debts. But consumer debt is by far the
biggest type of debt problem for which people come for help.
Are you one of these people? Do these
reasons seem familiar? Don't allow debt to darken
your life - help is available. Call the
Credit Helpline now on
08704 28 28 29
lines are open 8.00am to 10.00pm, Monday to
Friday.
|
|
Of people
in debt, 25% are being treated for stress, depression and
anxiety by their GP. More than 3 million people are struggling
with energy bills, 4.7 million are in debt to their water
company and more than a million have had their phone cut off.
UK consumers could save £1bn a year on energy bills
by switching supplier and installing better efficiency measures,
the government has estimated. The average gas bill has increased
by 18% this year, and the cost of electricity has risen by
14% on average.
A survey for the Financial Services Consumer Panel assessed
only a third of younger adults (aged 21-24) as financially
literate, compared with nearly half of adults overall. Very
few younger adults expressed confidence about purchasing new
products, making them particularly vulnerable to mis-selling
and mis-buying.
One in seven people entering retirement now do so with mortgage
debt still outstanding, according to the equity release advisers
Key Retirement Solutions.
The cost of running a car is now more than the average mortgage.
Motorists spend an average £438 a month to keep a car
on the road - £21 more than goes on bricks and mortar.
Is forward planning being forgotten?
The
need for consumers to be able to make sound long-term financial
plans is ever more important. Pension provision is one of
a number of areas where consumers are being required to take
increasing responsibility for their financial affairs. We
see more evidence of a ‘savings gap’ – with
consumers’ expectations for retirement and their saving
and borrowing behaviour being out of line. Good consumer understanding
is needed for consumers to be able to make appropriate plans
for the longer term, and meet the increasing requirements
placed upon them. Consumers also need to have confidence in
choosing from the range of products available (FSA Financial
Risk Outlook 2005)
Two-thirds
of the UK's adult population have not made a will, according
to a poll by Tesco.com
Worrying facts...
Nearly four out of five people do not know that APR refers
to the interest and other costs of a loan, four in ten admit
they do not understand mortgages or ISAs, and a third lack
confidence in their financial affairs. These are some of the
results of a survey conducted recently by Mori. One in five
did not understand the concept of inflation. Nearly a third
did not know that insurance products are designed to protect
their owners from unforeseen events. Only 30 per cent could
calculate four per cent interest on £2,000 over two
years!
Research by National Savings and Investments (NS&I) found
that almost two-thirds of people (64 per cent) interviewed
in January 2005 do not take inflation into account when looking
to save, even though inflation is running at 3.5 per cent
as measured by the Retail Prices Index (RPI).
Big problems are looming for a large proportion of the UK
population, middle classes working in the private sector particularly.
The CBI estimates that 12 million people are not saving enough
towards their pensions. Of the 12 million, 60% are not contributing
to a private pension at all.
British people save half the amount that other Europeans do,
and are more likely to spend than save spare money, according
to research by the friendly society Liverpool Victoria. British
households have an average income of £28,927 and save
on average £132 a month; just 5.5% of their income.
|
|
