Recent reports suggest that the Bank of England and the Financial Conduct Authority (FCA) hold some serious concerns about the rapid growth of consumer borrowing (on credit cards, car purchases, overdrafts and private loans) and the increasing level of personal debt within households.
Details from the Bank of England showed that consumer credit has been growing rapidly over recent years, reaching an annual growth rate of 10.9% in November 2016. This is the fastest rate of growth since 2005 and comes at a time when the total amount of consumer debt has reached £1.5 trillion.
Both organisations highlight the expansion of car finance deals in particular, with the value of deals used to buy new cars reaching a monthly record of £3.6 billion in March 2017. The FCA are also focussing their attention on credit card liabilities, with an estimate that 3.3 million people are stuck in “persistent” credit card debt: whereby all money is spent on repaying the interest on the card debt while the total debt is never lowered.
It is also feared that an increasing cost of living coupled with slow wage growth are prompting some households to run down their savings, which is supported by figures released by the Money Advice Service showing that 16 million people in the UK have savings of less than £100.
All of these factors are potentially leaving households with little room to manoeuvre and at risk if interest rates were to rise. If your finances are suffering, then a confidential discussion – at an early stage – with an experienced and qualified specialist to talk through the range of options available, may well be an appropriate course of action. Please contact us if you would like an initial consultation, free of charge.