Source: CreditandCollectionsWorld.com and SourceMedia, Inc.
The consumer debt picture in the United Kingdom just gets more dire, according to Credit Action, a national money education charity that released fresh data this week.
Total UK personal debt at the end of August stood at £1.36 trillion (U.S. $2.78 trillion), growing about 9.9% from a year earlier. The average household debt in the UK is $114,770, up 11.5% from $102,925 in August 2006. Personal debt as a proportion of annual income rose from 105% in 1997 to 164% in 2006, according to Credit Action.
Total secured lending on homes at the end of August 2007 stood at $2.34 trillion, up 10.8% from a year earlier. Average consumer borrowing via credit cards, auto and retail finance transactions, overdrafts and unsecured personal loans stood at $9,224 per average UK adult. Eighteen percent of UK adults have more than $20,000 in unsecured debt.
Average interest paid by each UK household on their total debt will be about $7,594 this year, which equates to about 9% of take-home pay. Thatís a 19.3% jump from $6,367 in annual interest expense last year.
There were 26,956 individual bankruptcy filings in England and Wales in the second quarter, rising 4.2% from the same three months of 2006. About 8.2 million British adults are in serious debt and 2.1 million are struggling with repayments. More than 7.4 million household bill payments have been missed or paid late in the past six months, Credit Action reports.
The majority of people who take out a personal loan to consolidate existing debts go on to build up more debt and struggle with the consequences. Research by moneysupermarket.com shows 28% of Britons took out a loan to consolidate some or all of their existing borrowings, but 66% of these borrowers continue to build up even more debt.
Datamonitor, which does research and analysis, predicts that about 25% of working Britons will be refused loans, mortgages and credit cards by 2011 as they struggle with mounting debts. The number of borrowers blacklisted by mainstream lenders will increase from 7 million to 8.6 million over the next four years.
Stay tuned for more statistics on British use of plastic, home finance and the indebtedness of the young.