UK tops £1.5 trillion in private debt – November Money Stats

The Money Stats are out today showing for the first time that private debt has topped £1.5 trillion. To put this into perspective, the average adult in the UK now owes almost £30,000, or 113.3% of average annual earnings.

This figure has grown by £1036.58 over the 12 months to September and is expanding at the fastest rate since before the financial crisis in 2008. Debt fell for a few years after the crisis, but has begun to rise since 2013, though not quite at the rate seen in the early 2000s.

£30K each means that the amount we owe on our mortgages, loans and credit cards is now 82% of what the entire economy produces in a year.

87% of this debt is mortgages, so is secured against property. But the 51 million adults in the UK also owe an average of £3,737 in unsecured debt like credit cards and personal loans.

Borrowers should be aided by the Bank of England’s decision to cut the base rate to 0.25% in August. This should bring down the interest rates people pay, but so far does not seem to have impacted hugely on the rates that all consumers face. Mortgage interest is a little down, but average credit card interest crept up from 18.29% in August to 18.42% in September.

With the possibility of inflation and rate rises just around the corner, people should be getting ready for a time when this debt mountain is more difficult to deal with.


Source: Bank of England

Michelle Highman, Chief Executive of The Money Charity says:

“When we see these record levels of debt, it’s important to remember that there is nothing necessarily wrong with borrowing. It is a good way of paying for things you can’t afford up-front like university or your house. But with interest rates so low at the moment, it’s easy to think that high levels of debt are manageable”

“On Thursday Mark Carney claimed inflation will rise to 2.7% next year. More inflation means higher interest rates, which we’ll all have to pay on our mortgages, loans and credit cards. If you’re in debt, particularly if you have a variable mortgage, it’s time to prepare by taking control of your finances.”

“So it’s especially important to stay in control of your borrowing, and there’s help available at an early stage if you’re in difficulty. “If your debt feels too much to deal with, there’s free, impartial advice available from charities like StepChange.”

Other key points from August’s Money Statistics include:

  • Public Sector Net Borrowing (excluding public sector banks) was £10.6bn in September 2016, meaning that the Government spent an average of £353m per day more than it took in during the month (equivalent to £4,090 per second).
  • Citizens Advice Bureaux across England and Wales dealt with 598,747 new enquiries in the three months between April and June 2016.
  • 104,000 people (1,322 a day) reported they had become redundant over the three months, up 166 a day from the previous quarter.
  • The Office of National Statistics says that the average house price for first-time buyers was £184.423 in August 2016, which is an annual increase of 8.2%.

Get the full picture, and many more fascinating facts about money in the UK in our monthly Money Statistics.