Midlands insolvency experts are raising the warning flag following the release of data by the Office for National Statistics which highlights that more than a quarter (26 per cent) of adults say they are burdened by some form of non-mortgage debt.
While these preliminary results from the ONS’s latest Wealth and Assets Survey show that the figure has fallen since 2010-12, the local branch of insolvency body R3 is warning against complacency as a significant percentage of adults still remain in sizeable debt.
R3 Midlands chairman Chris Radford (pictured), a partner at law firm Gateley in Birmingham, said: “One factor behind this fall in concern could be record low-interest rates, which have been suppressed for some years since the global financial crisis.
“This may have allowed complacency to creep in, as people with persistent debt are able to roll over sums owed from one zero-percent or low-interest credit facility to another, without reducing the overall amount to be paid back. Unemployment is also at a very low level, which is helping people keep their finances ticking over.”
According to R3 Midlands, with the possibility of interest rate rises and uncertainty around Brexit causing ripples in the economy, there is no guarantee that the current, relatively benign atmosphere for borrowers will persist.
Radford added: “Wage growth has flattened in recent months, which will put increasing pressure on people’s finances. R3 strongly recommends that anyone who feels concerned about their levels of debt seek advice from a qualified advisor. Even those who feel unconcerned about their ability to meet their commitments should consider a personal finance health check. They should ensure that they are protected against any future shocks, such as an economic downturn, job loss or change in life circumstances.”