How personal debt grew to £1.4 trillion.

AD9898_2

Interesting article with some eye watering figures. There must be a significant minority out there who are completely screwed and that's with base rate at 0.5%. You reap what you sow though I guess.

Total lending rose by £1.5bn in January, leaving the average UK household £57,635 in the red, according to figures from personal debt charity Credit Action.
Individuals now owe more than the entire country managed to produce in the year from the final quarter of 2009.

While overall lending, which includes mortgages, rose in January taking total debt to £1,452bn, the amount owed on credit cards and personal loans actually fell marginally, by £300m. During January 2008, by comparison, loan and credit card lending grew by £8.4bn.

Meanwhile, recession-hit companies continue to lay off workers. Redundancies hit 1,589 people every day, while 833,000 Britons have remained unemployed for 12 months or more.

Every day around 337 people are being declared insolvent or bankrupt, while a further 1,000 are seeking some kind of formal debt rescheduling. Property repossessions reached 87 a day, or one every 17 minutes

http://www.thisismoney.co.uk/credit-and-loans/dealing-with-debt/article.html?in_article_id=524400&in_page_id=62&ct=5

Nikel

Wow that chart was going exponential. Till the crash.

FATBALLZ

Let's hope house prices have another boom so that the wealth created can offset all that debt.

ukcarper

What percenatge is credit/loans and what is mortgage?

Nikel

Every day around 337 people are being declared insolvent or bankrupt, while a further 1,000 are seeking some kind of formal debt rescheduling. Property repossessions reached 87 a day, or one every 17 minutes

So has there been an increase in activity on MSE on this subject as a result?

Graham_Devon

Nikel wrote: »

Wow that chart was going exponential. Till the crash.

And thats exactly how some people want it. Just keep going up and up and up, by more and more each year. There are no problems associated with this....just wealth. Apparently.

Banks are nasty nasty companies who "ration" mortgages and create a "famine".

Ask the same people about their own debt status, and they are paying it down to be debt free as fast as they can. Yet they shout from the rooftops that debt is good. Bizzare little fellows.

Linton

AD9898 wrote: »

Interesting article with some eye watering figures. There must be a significant minority out there who are completely screwed and that's with base rate at 0.5%. You reap what you sow though I guess.



http://www.thisismoney.co.uk/credit-and-loans/dealing-with-debt/article.html?in_article_id=524400&in_page_id=62&ct=5

To take the first statistic I looked at, the number of people jobless for more than 12 months was > 800K for most of the 1990's. It dropped drastically within a few months of the 1997 election.

Just checked the redundancy rates: according to
http://www.statistics.gov.uk/STATBASE/Product.asp?vlnk=9474 the redundancy rates in 2010 were not very different to what they have been since 1997 (as far back as the statistics are available).

So we are hardly in shock-horror territory.

Thrugelmir

Linton wrote: »

So we are hardly in shock-horror territory.

Totally different situation. With a far more open global economy.

Generali

ukcarper wrote: »

What percenatge is credit/loans and what is mortgage?

From the Bank of England website:

Debt secured on dwellings: £1,240,311,000,000
Consumer credit: £212,085,000,000

15% is consumer credit
85% is secured debt

Nominal debt is increasing at an annual rate below 1% pa and has been for the past 18 months which means that in real terms amount owed is falling. As interest rates have fallen and debt is increasing more slowly than incomes are rising, average ability to service debt will be improving, although clearly not if you lose your job or your business goes to the wall.

The numbers are seasonally adjusted BTW. NSA numbers are available on the same link but the difference is marginal. Total debt rises by about £1,000,000,000 without the seasonal adjustment.

Nominal consumer credit has fallen from £232,686,000,000 (SA) 2 years ago (link).

You need to be very careful when using these numbers to make any assumptions about the level of debt. The reason is the way that securitisations* are treated.

If the entity that is done through is based abroad (eg Luxembourg, Ireland, Cayman Islands; there are lots of places you could chose for all sorts of reasons) then the debt disappears from these figures. The likelihood is that the Bank of England numbers will be understating the actual amount of consumer debt by an unknown amount.



*Securitising debt is when you parcel it up and sell on the flow of income and principal repyment to someone else.

Generali

RenovationMan wrote: »

The main point being that these figures only show levels of debt and not assets. My debt is £270k, which would be a heart-stopping amount for most people, however my personal assets are over £360k.

So despite the bare facts that I have £270k of debt, when everything is sold and cashed in I would walk away with £90k in my pocket. I would imagine that only a small proportion of people in the UK are in negative equity (i.e. owe more in debt than they have in credit).

Still, let's not let facts, figures and logic get into the way of (yet) another AD9898 debt rant.

It's a good point that most people with debt are solvent and can easily service their debt like you.

Take these numbers with a pinch of salt however. They are meant to show the amount of debt on the balance sheet of UK banks, not the indebtedness of British people.

michaels

Wow - a 10% real terms decrease in debt over 2 years - that must be historically unprecedented (except maybe during periods of very high inflation?)- amazing the money supply has remained positive against such a headwind.

250k of that debt is mine - it is secured against a property worth nearly twice as much and it is also on deposit earning more interest than the mortgage costs - of course if I subscribed to the 'all debt is bad' arguement that seems to lie behind this type of scaremongering I would be more sensible to use the capital to pay down the debt and forgo the 2-3k after tax profit I make on the borrowings...

Generali wrote: »

From the Bank of England website:

Debt secured on dwellings: £1,240,311,000,000
Consumer credit: £212,085,000,000

15% is consumer credit
85% is secured debt

Nominal debt is increasing at an annual rate below 1% pa and has been for the past 18 months which means that in real terms amount owed is falling. As interest rates have fallen and debt is increasing more slowly than incomes are rising, average ability to service debt will be improving, although clearly not if you lose your job or your business goes to the wall.

The numbers are seasonally adjusted BTW. NSA numbers are available on the same link but the difference is marginal. Total debt rises by about £1,000,000,000 without the seasonal adjustment.

Nominal consumer credit has fallen from £232,686,000,000 (SA) 2 years ago (link).

You need to be very careful when using these numbers to make any assumptions about the level of debt. The reason is the way that securitisations* are treated.

If the entity that is done through is based abroad (eg Luxembourg, Ireland, Cayman Islands; there are lots of places you could chose for all sorts of reasons) then the debt disappears from these figures. The likelihood is that the Bank of England numbers will be understating the actual amount of consumer debt by an unknown amount.



*Securitising debt is when you parcel it up and sell on the flow of income and principal repyment to someone else.