Household debts rise to top £1.5 trillion

Household debts have risen to £1.5 trillion in the UK for the first time, new statistics from The Money Charity. After a period of flat growth, debt has begun to rise again in recent years. The Money Charity, which compiled the statistics, says UK adults owe an average of nearly £30,000 each – mostly in mortgages, but also in loans and credit cards – 83% of the country’s annual economic output.

Michelle Highman, chief executive of the Money Charity, said: “When we see these record levels of debt, it’s important to remember that there is nothing necessarily wrong with borrowing. But with interest rates so low at the moment, it’s easy to think that high levels of debt are manageable. On Thursday, Mark Carney claimed inflation will rise to 2.7% next year. More inflation means higher interest rates, which we’ll all have to pay on our mortgages, loans and credit cards. “If you’re in debt, particularly if you have a variable mortgage, it’s time to prepare by taking control of your finances.”

November’s statistics reveal that average personal debt rose £1,036 over 12 months to September to just under the £30,000 mark. Some 87% of this debt is in the form of mortgages, secured by property. But UK adults also now owe an average of £3,737 in loans and credit cards.

The charity pinpoints rising house prices, low levels of savings and the normalisation of debts as reasons for high levels of indebtedness.