Household debts (excluding mortgages) are on the rise in the UK, according to the Office for National Statistics (ONS). Total household debt in Great Britain was £1.28 trillion in April 2016 to March 2018, of which £119 billion (9%), which suggests that average household debt rose to £9,400. £1.16 trillion (91%) was property debt (mortgages and equity release). Much of the increase is a result of higher student loan and hire purchase debt.
Total household financial debt rose by £12 billion (11%) in the latest period, up from £107 billion in April 2014 to March 2016, with most of the change accounted for by increased hire purchase debt (up by £6 billion) and student loans from the Student Loans Company (up by £7 billion).
Increases in total household property debt and total household financial debt in the latest period were driven by a combination of both an increase in the number of households with debt and increasing levels of debt.The least wealthy 50% of households held 36% of total household debt in April 2016 to March 2018, but whilst they held less debt their total debt was a relatively large proportion of their total wealth, with less wealthy households being more likely to have financial debt.
In April 2016 to March 2018, total debt was three times larger than total wealth for the lowest wealth decile, while total wealth was larger than total debt for the other deciles. Whilst 4% of households in April 2016 to March 2018 were identified as having problem debt; households in problem debt were more likely to rent their home (66% renting compared with 34% for all households) and have an unemployed household head (6% compared with 1% overall).
The poorest 10% of households have debts three times bigger than the value of assets they own, while the top 10% have total wealth – property, pensions and other assets- worth 35 times larger than their debt.
The analysis shows that personal loans account for £35bn of total household debts, £32bn is from student loans, £25bn is hire purchase, and £22bn is on credit cards, while the remainder includes £3bn of overdrafts.