UK personal debt at Record levels

2007 has seen unprecedented rises in personal debt, with UK households paying more in debt than ever before.

Figures from UK treasury reveal that the average family’s total personal debt now accounts for 164 per cent of their annual income, the highest figure in the developed world, and the highest figure in the UK’s history. In 1997, the figure stood at 105 per cent. The % spent on interest payments has risen from 6.5% to 9%.

Reasons for the rise in debt include:

• Rising house prices
• New types of loans and mortgages
• Change in cultural factors which make debt more acceptable.

ANother problem that could face homeowners soon is that 2.3 million fixed rate mortgages were taken out during the record low interest rates of 2003 and 2004. These fixed rate mortgages are likely to end soon, leaving many facing higher interest rate payments.

This means the recent rise in interest payments may soon have a biting effect on the UK housing market and UK economy .

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