UK debt level falls for the first time

September 1st, 2009

After last week’s worrying news about the ease with which people can get into debt, some more comforting news has emerged this week in that the total amount of personal debt in the UK has fallen for the first time since records began in 1993, the Bank of England has said.

Personal borrowing fell by £600m in July, taking the total owed by individuals down to a piffling £1.457 trillion. There was a drop in both mortgage debt and other forms of borrowing such as bank loans.

The number of mortgages approved in July rose again to 50,123, suggesting property sales will continue to rise. The amount outstanding on mortgages fell by £400m as people repaid more than they borrowed during July.

The amount accumulated on what is called consumer credit, such as loans and hire purchase agreements, dropped by a net £200m, once a small rise in credit card borrowing of £92m was taken into account.

The increasing number of mortgages approved, but not yet lent, is widely seen as a good indicator of future trends and indicates that the revival in sales seen this year will continue into the autumn.

However, the good news is not uniform across all sectors of the economy and population. Figures show that the debt burden of retired people in the UK is growing with a third in the red on loans and credit cards, according to a recent poll by Scottish Widows.

Retirees with outstanding non-mortgage debt owed an average of £7,344, up from £6,732 in the same poll a year ago. Some 15% of retired people are also still paying off a home loan, with an average debt of £50,100, up £8,000.

Some grown-up children are still financially reliant on their older parents, the poll also found. It suggested that 7% of retirees were still paying towards the upkeep of the children who have reached adulthood.

Those approaching retirement were also saddled with debt, Scottish Widows found, with 43% still paying off a mortgage. The average outstanding mortgage debt had fallen in a year, however, down from £58,300 to £57,000.

That the total debt of the British population has fallen for the first time since records began is really good news, although I do not expect the new trend to last. That older people are having more debt problems than ever is really concerning news and is something that financial institutions, in concord with Governmental agencies, should look at urgently.

This entry was posted on Tuesday, September 1st, 2009 at 7:32 am and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

UK debt level falls for the first time

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