Average household spends £406 on monthly debt repayments

The average household spends £406 on monthly debt repayments, excluding the mortgage according to HL Savings & Resilience Barometer.

The research showed that those with mortgages spend an average of £814 on top of this with almost one in ten households (9%) in arrears. Among the lowest fifth of earners this rises to 27%.

The data also shows that one in five people are concerned about their debt position. In addition, credit card debt is up 12.7% in a year to £68.9 billion and other consumer debt (including loans, overdrafts and car finance) is up 6.7% to £150.4 billion (Bank of England).

Figures are from the HL Savings & Resilience Barometer, January 2024, unless otherwise stated.

Sarah Coles, Head of Personal Finance, Hargreaves Lansdown said “The relentless rise of prices means our budgets are stretched further than ever, debts have been building, and they’ve become a real issue.

“Higher interest rates have been putting the squeeze on millions of families, and aren’t going anywhere fast at the moment. It means a toxic combination of pressures pushing up debt repayments – leaving us with an even tougher job to make ends meet each month. It’s hardly surprising that one in five people are concerned about their debt position, and an increasing number of people on lower incomes are falling into arrears.

“We repaid a massive chunk of our debts during the lockdowns, but over time, they have gradually been rising. In December Bank of England statistics show we had £68.9 billion outstanding on credit cards – only slightly down from the pre-pandemic level of £71.9 billion.

“The more we earn, the more we tend to borrow, so higher earners are bearing the biggest debt burdens – the HL Savings & Resilience Barometer found that the top fifth of earners repay £628 each month. However, despite having smaller payments, tighter budgets can make debt repayments harder to manage for lower earners. The fifth of people on the lowest incomes are wrestling with repayments of £168 a month.

“This is all in addition to any mortgage repayments. These average £814 for those who have a mortgage, rising to £921 for those aged 40-44. For those who have remortgaged while rates have been so high, the pain has been particularly difficult to bear, and the Barometer found that by the end of this year, one in four people with mortgages will be at risk of running into mortgage difficulties, because their repayments make up more than a quarter of their disposable income.

“At that stage, 340,000 households will be at ‘high risk’ because in addition to hefty mortgage repayments they don’t have enough emergency savings (to cover at least three months’ worth of essential spending). 390,000 will be at ‘critical risk’ because in addition to both these things, they have unsustainable levels of spending.”