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Young Britons facing bleak financial future

Young Britons facing bleak financial future

Category: Debt

Updated: 02/11/2011
First Published: 02/11/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Many young Britons are facing a bleak financial future, as they face increased debts and less chance of getting on the property ladder.

Research conducted by the Consumer Credit Counselling Service shows that people are building up higher levels of debt at a younger age, with almost three quarters of consumers aged 18 to 39 having unsecured debts.

Younger households are also more likely to look to credit to make ends meet, with a fifth of those in the 18 to 24 year old age group admitting that they are likely to need to borrow in the next three months.

And with debts growing, people aged under 40 are more likely to fall behind with their debt repayments, with their chances of being declared insolvent double that of those in the 55+ age group.

As well as rising debts, the chance of younger people getting their hands on their own home is diminishing.

In the 10 years to 2007, the average house price grew from around 2.3 times to nearly 5.5 times gross earnings, leaving younger homebuyers with extra mortgage debt as a result of a significant transfer of wealth to those further up the housing ladder.

Rising prices and squeezed incomes mean that the 'bank of mum and dad' has become the only option for an increasing number of first time buyers, with the proportion under the age of 30 requiring financial assistance rising from 38 percent in 2005 to 84 percent in 2010.

"The younger generations are facing a worrying future," said Wilf Stevenson, chairman of the CCCS.

"Higher debts and fewer assets will put many in a precarious financial position, and these trends threaten to impact considerably on quality of life in later years.

"It is also essential they are protected from the aggressive practices of commercial debt management companies who will only add to their debt burden."

Figures suggest that as many as two million young households find themselves in financial difficulty.

More than one million (1,039,000) households in the under 40 age group are 'already in financial difficulty', either three months behind with a debt repayment or subject to some form of debt action such as insolvency, with a further 893,000 'at risk' of falling behind.

"Making sure that consumers know they can turn to debt charities such as CCCS for free advice and support must be a key part of our strategy in dealing with this problem," added Mr Stevenson.

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