Friday, July 31, 2009

The UK Debt mountain continues to grow by £5k per second

A repossession happens every 10 minutes, says charity

Every 10 minutes a property is being repossessed, according to the latest figures by debt charity Credit Action. Within its monthly UK debt report, the charity revealed that, including mortgages, the average UK household debt in June is up £58,320 - helping towards the overall UK personal debt of £1.458 trillion. It also found that one British person every 4.35 minutes is declared bankrupt or insolvent, as 3,300 people are made redundant every day.

Posted by jack c @ 02:40 PM (939 views)
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13 thoughts on “The UK Debt mountain continues to grow by £5k per second

  • What annoys me about these articles is they never make it crystal clear what debt they are talking about.

    I can only assume mortgages are included, in which case £30k per adult head doesn’t sound so bad, but what does that equate to per WORKING adult head ?

    If we knew that (and we should from the article) then the figures start to mean something because we know the average wage.

    Another thing which I assume is now included in these figures is cars on lease.

    Now yes there’s a big difference between taking out a £5k loan for a second hand Golf and going crazy in a BMW dealership and buying a new X5.
    But, the nature of buying a car has changed and leasing a car ‘particularly if one has a company car allowance’ means you are not tying up capital in the ownership but simply paying the depreciation + say a 20% margin (rough figure).

    This will show up as a massive increase in the debt figures, but a has anything really changed other than the depreciating equity we previously held in motor vehicles.
    Also alot of company car drivers now get given an allowance to purchase their own car via this method, so the debt is actually backed by income.

    So to conclude all very interesting numbers, except you can’t glean whether in actual fact they are high or could go higher.

    Because of our own thoughts we assume these figures are already really high, but who’s to really say they couldn’t go up by 20%. Or put anotherway they’re not that bad really.

    Lazy journalism which had the potential to be quite interesting.

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  • 3300 people made redundant every day
    That’s one every 26.18 seconds
    And house prices go down 81% of that
    So every 21.2 seconds, house prices are going down…. Yeehah!!

    More faultless maths…

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  • More numbers from similar article ……

    Figures from charity Credit Action show one property is repossessed every ten minutes. Its says 42 properties were repossessed every day during the last three months to end March 2009, with the Council of Mortgage lenders estimating this will increase to approximately 178 a day throughout 2009. While total secured lending on properties at the end of June 2009 stood at £1,227bn, with the average household debt in the UK now at £9,240 – excluding mortgages. The average household debt in the UK is £58,320 when mortgages are included. With the average outstanding mortgage for the 11.1m households who currently have mortgages at £110,550 and the average owed by every UK adult, including mortgages now at £30,460. This figure represents 133% of average earnings.

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  • “A repossession happens every 10 minutes”
    – no.
    The average time between repossessions will have been less than 10 minutes if the CML’s forecast is realised”
    24 * 60 / 172 < 10 But 24 * 60 / 42 = 34.3 ( 3 S.F. )

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  • Every 10 minutes a property is being repossessed and every 10 minutes a property is being sold to a investor looking to rent the property to a repossessed family. Fabulous economics!

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  • jack c

    Thanks for the important info missing from the article.

    If the average house with a mortgage has 1.5 incomes (estimate) and that is based on an average wage of £22k (x 1.5) = 33k. Then against an income of £33k £110 k doesn’t seem too bad and given an average house price of £150K a reasonable amount of equity on average.

    On your last sentence Jack (30.46k is average owed by UK adults) I assume this counts all over the age of 18. Clearly not all of these work so the average for working population is I assume alot higher.

    The number that did surprise me Jack was £9.42k unsecured per household. But if this for example included £5k for a vehicle (ie not all on credit & store cards) then the figure doesn’t sound so bad.

    Taking the 2 figures figures the average repayment figure I guess would be about £8-900 per month from a take home pay in excess of £2000 per month.

    Doesn’t leave much spare when utility and food bills are takeninto account.

    In fact add in twice weekly take aways and a 2 week holiday and the average household is probably overspending by about £5k per annum.

    At present I very much doubt they’ve cut back on those items, but I guess they could.

    I don’t know, in some ways the figures don’t seem all that bad to me, on the limit yes, but unresolveable ?

    Throw in a redundancy and or overtime ban and I can see the debts mounting up. But interest rates for loans and mortgages are currently at historic lows.

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  • mander

    The crazy thing is the repossessed family will pay the investor more in rent than they would have done on an interest only mortgage or renting from the bank.

    Work that out.

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  • Why is Credit Action commenting on government debt? Have Brown and Badger been in for counselling?

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  • str – The repossessed family would not have got the same interest only deal as the investor due to their credit score and lack of deposit. Their rent will be both less their interest only mortgage and more than the investor’s one. Otherwise they’ll rent somewhere smaller or be homeless.

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  • * less than their *

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  • 666

    ok, but given the avarage repo’d house is likley to be at the lower end (ok earnings aswell) there won’t be a huge difference between the two.

    Anyway I guess they should’ve thought of the outcome before they ordered sky tv, had a take away every other day and smoked 40 tabs a day. They’ve only themselves to blame.

    Quite funny actually (not above) just reminded me of a ‘my parents were so poor’ tale I got from my misses a while back. She was gently encouraged to give up ‘expensive’ ballet lessons at the age of 9 or 10 by her parents. She understood this to be because they didn’t have much money and thought that all her life until she told me the tale & I pointed out that they both smoked at the time and they had clearly placed their tabs higher up the pecking order of life than their daughters hobby and exercise.

    That put the inlaws in a different light I can tell you. True though people do have different priorities and alot don’t seem able to plan ahead and rather take the head in the sand approach to life.

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  • str
    – …or maybe they just wanted her to get an education?#
    My better half was a ballerina until injury stopped that and education becomes a distant second ( even though at English National and The Royal School she studied A levels, there was very little time to study what with 8+ hours of ballet a day including weekends ), and the fact that they don’t eat doesn’t help.

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  • 666
    The ballet wasn’t that serious, I think she was only going once or twice a week.

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