People are not helping themselves

macaque_2

Looking at these numbers, it's no wonder that interest rates remain stuck on 0.5%. It would also appear that too few people are using this opportunity to put their finances in order.

Its the old moral hazard problem. Even on this website we hear the line "The government wouldn't let it happen" when referring to the interest rate risk. Perhaps its time for a whiff of grape shot.

the average household debt in the UK is now £8,121 - excluding mortgages. This figure increases to £15,618 if the average is based on the number of households who actually have some form of unsecured loan........

...........Average household debt in the UK is ~ £55,854 when mortgages are included.

http://www.mortgagestrategy.co.uk/economy/total-uk-personal-debt-stands-at-£1452bn/1032071.article

Cleaver

Average household debt in the UK is ~ £55,854 when mortgages are included.

I've said this before on here, but I'm always astounded at how low this figure is.

Graham_Devon

Cleaver wrote: »

I've said this before on here, but I'm always astounded at how low this figure is.

It's more than the entire country produces in a year. You find that low? Low enough to be astounded!?!?

Also, that figure averages the debt out across every household. If you look at those households who DO have debt, rather than all households, the number jumps, which is where the problem lies.

You can see it in these figures...

Average household debt in the UK is ~ £8,121 (excluding mortgages). This figure increases to £15,618 if the average is based on the number of households who actually have some form of unsecured loan.

The debt figure nearly doubles when you only look at those with debt.

It's also the rapid increase. Even allowing for all households in the UK, average debt has increased 22% in just 6 years. However, it's decreased just 2.3% in 3 years. And we can hardly get a more favourable timeframe to decrease debt, what with low rates, and very hard to come by new lending.

Cleaver

Graham_Devon wrote: »

It's more than the entire country produces in a year. You find that low? Low enough to be astounded!?!?

Yeah, low enough to be astounded. Maybe it's my age and generation, but I would have guessed it to be around £80,000 or so per household once you take in to account mortgages.

Wookster

Cleaver wrote: »

Yeah, low enough to be astounded. Maybe it's my age and generation, but I would have guessed it to be around £80,000 or so per household once you take in to account mortgages.

We have one of the highest private debt: GDP in the world.

ukcarper

I can’t see that mortgage dept is bad if you are able to service it, after all if you double mortgage dept you get £95k at 5% over 25 years that’s £562 a month. Quite a bit less than average rent in fact half the figure macaque used in a previous thread.

HAMISH_MCTAVISH

I'm with Cleaver on this one.

It's amazing that debt is so low..... Really puts the doomers tedious wailing into perspective.

chucknorris

macaque wrote: »

Looking at these numbers, it's no wonder that interest rates remain stuck on 0.5%. It would also appear that too few people are using this opportunity to put their finances in order.

Its the old moral hazard problem. Even on this website we hear the line "The government wouldn't let it happen" when referring to the interest rate risk. Perhaps its time for a whiff of grape shot.



http://www.mortgagestrategy.co.uk/economy/total-uk-personal-debt-stands-at-£1452bn/1032071.article

OK then macaque convince me why I should reduce my mortgage debt when I am paying an interest rate of just over 1%!

exil

It's actually those who, indirectly, provide the finance for these loans, through bank deposits and investments, who have the most to worry about, not those who owe the money. The last government rescued the bank-deposit holding middle classes from the consequences of bad debt incurred by the banks, but only for the moment.

Last time it was counted(2008), the value of property in the UK was £3.5 trillion, pensions £3.5 trillion and physical assets and investments about £1 trillion each.

Total non-mortgage debt was about £200 billion and mortgage debt £800 billion or in total about 10% of the value of assets.

macaque_2

chucknorris wrote: »

OK then macaque convince me why I should reduce my mortgage debt when I am paying an interest rate of just over 1%!

Chuck, I can't. With a 1% mortgage, you are in as near as it gets to a no lose situation. Good luck.

PasturesNew

chucknorris wrote: »

OK then macaque convince me why I should reduce my mortgage debt when I am paying an interest rate of just over 1%!

Because one day it'll go up - and you'll spend the rest of your life wishing you had.