Consumer debt default risk at post-crisis high
According to official figures, the average British household will owe £24,000 more by 2020
British households are at more risk of defaulting on their debts than at any time since the financial crisis, according to a first-of-its-kind analysis of consumer borrowing.
Based on projections by the Office for Budget Responsibility (OBR), the new report by Arrow Global, one of Britain's biggest specialist debt collectors, estimates that as many as a million more households could fall behind on their debt repayments over the next five years "as they struggle with tougher economic conditions".
The Times says a sharp increase in mortgage, credit card and loan defaults would raise the prospect of a rise in home repossessions and personal bankruptcies and mark a reversal of seven years of falling debt levels. According to the OBR, every household will be £24,000 further in debt by 2020, amounting to £640bn across Britain in total.
The UK is "now at a turning point", says the Times, as rising consumer confidence and healthier banks fuel borrowing that, combined with higher interest rates, will put a significant number of people under strain.
While the debt-to-income ratio has fallen since the financial crisis in 2008, a new survey by the Bank of England has shown that borrowing is once again on the rise.
According to a study from Citizens Advice, more than a quarter of a million Britons "live for the day" when it comes to their finances and half sometimes run out of money at the end of the month, which is one of a number of causes of excess debt. It also warned that people don't seek money advice until they reach a crisis point, such as being unable to afford debt repayments, notes The Independent.