UK households laden with £10,000 debt
23/03/2015
The average UK family will have £10,000 of unsecured debt by 2016, according to accountancy firm PricewaterhouseCoopers (PwC).
The figures from PwC include debt accumulated through personal loans, student loans and credit cards, but excludes mortgages. This is the highest level of debt consumers have ever been in, with unsecured borrowing increasing by 9% last year, or £19.7 billion.
One of the reasons for the substantial rise could be down to the increase in student debt, as almost half of the increase was due to student loans. Credit cards were responsible for 22% of the rise, and the rest was from other bank borrowing.
The most recent report from the Bank of England puts the current average level of debt in a UK household at £8,000.
Most people in debt feel like they can handle the repayments at the moment. This may be because interest rates are at a historical low, which means borrowing works out as cheaper for most consumers. People may see their finances stretched more once interest rates rise, as they may have to pay higher monthly repayments on their debts.
Simon Westcott, a director of PwC's financial services practice said:
"Old favourites such as credit cards are staging something of a revival, while newer forms of borrowing such as peer-to-peer lending are starting to gain ground.
"Despite our survey revealing a relatively high degree of confidence among consumers about their ability to stay on top of their debts, (the) affordability of the UK's household debt pile may come under pressure in the coming years.”
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