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Britons ‘borrowing more than ever’

Britons ‘borrowing more than ever’

Category: Money

Updated: 02/12/2011
First Published: 02/12/2011

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 It is now over 6 months old so the content may be out of date.

Earlier this year David Cameron encouraged people to pay off their loans and cards, saying 'the only way out of a debt crisis is to deal with your debts'.

But consumers are ignoring the PM's advice, according to research carried out by Save Our Savers which shows we are putting more on plastic than ever before, adding another £1.75 billion to our collective balance over the last 12 months.

The commonly held view that people are currently paying down their mortgages is also untrue, with Britons shelling out £2.5 billion in mortgage interest each month, compared to £905 million ten years ago.

In total, Britons owe £1.24 trillion on their mortgages.

Ten years ago total mortgage debt was only £577 billion and about £905 million was being repaid regularly each month.

The Bank of England itself recently said: "There is little sign that, at the aggregate level, households are making an active effort to pay down debt more quickly than in the past."

People also seem loath to pay the balance off their plastic.

According to the Bank of England, in September total outstanding credit card debt was £57 billion. That was £2.1 billion less than a year earlier but, over the same period, the banks wrote off over £3.9 billion in bad debts.

Save Our Savers says the reality is that, over the year, borrowers put another £1.75 billion of debt onto their credit cards.

"The impression, reinforced by David Cameron, that Britons are paying down their debts, is wrong. The debt problem is not going away," said the group.

"The Chancellor's attempts to reduce the country's debts have been blown off course. It looks as though the public never even set out on that course.

"But then, with the Bank of England and the Government implying that they never want base rate to budge from its record low of 0.5%, why would people rush to pay off debt?

"If they are offered zero interest to borrow on a credit card, why would they not want to take out some more?"

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