Millions Teeter On The Financial Brink
Rising mortgage payments and increasing debts elsewhere are pushing over ten million adults to the brink of financial ruin in the UK.
Research commissioned by financial website uSwitch.com reveals a distressing picture of problems for a large chunk of the population in the grip of money troubles. Around one in four have major concerns that their current borrowing levels are already out of control, or about to become so.
Around one in eight – 5.4 million – have missed a payment of a debt of a bill in the last six months, and one in ten have had a direct debit, payment or cheque bounce in the same time. Around 3% actually fear that they could lose their home.
The impact of the five interest rate rises between August 2006 and July 2007 have finally begun to have a damaging effect on people’s finances, with some £100 having been added to most monthly mortgage repayments, and all credit – loans, overdrafts, credit card rates – is higher than it was.
The situation has been made even worse by the global credit crunch, with banks and building societies pushing up mortgage rates even further, refusing more loan and card applications, and chasing more borrowers through the courts to pay their debts.
Further studies by Mintel and Moneynet.co.uk have backed up the findings of debt paralysis by uSwitch.com.
Britons now owe a staggering £1.3 trillion to financial institutions, with the average person seeing half of their take-home pay going on mortgage repayments and other debts.
Director of consumer policy at uSwitch, Ann Robinson, said: “This is crunch time for consumers and it couldn't come at a worse time of year. In the run-up to Christmas, traditionally one of the biggest periods of consumer spending, people are concerned about their jobs, their homes and their ongoing ability to manage their debts and bills. The days of easy credit and the ‘buy now, pay later’ culture may be numbered, but they will leave a painful reminder for those left struggling with debt. The credit crunch will claim casualties - it will be enough to tip some over-indebted households over the edge.”