UK population repaying debts again

A report issued today shows that more and more people in the UK are using their savings to repay debts in what is a second wave of debt repayment during the current economic cycle. Not since the beginning of the credit crunch have we seen such debt repayment levels with a general consensus that concern about the economy and in particular unemployment are starting to make many in the UK think again about their spending patterns.

The very fact that total consumer savings in the second quarter of 2010 fell by £7 billion compared to the first quarter is a perfect example of the growing concern within consumer circles. While the vast majority of these debt repayments are in relation to mortgage arrangements we are also seeing many people starting to pay down their credit card balances and outstanding loans. While this cannot continue forever, due to the fact that consumer income is being squeezed, it is a breath of fresh air to see reality finally hitting home for many people in the UK.

If you take a step back and look at the situation from "outside" there does seem to be more mileage in paying off debts which can be attracting interest rates of 20% plus compared to savings rates which are minimal to say the least.