British households owe almost £1.3trn in debt weighed down by rising credit card bills, overdraft charges and hire purchase agreements.
This figure has grown by 4 per cent over the last two years, according to government figures.
However, unsecured borrowing jumped by 11 per cent, leaving 12.7 million people in the red with the average household holding £9,400 of non-mortgage debt.
Britons owe £1.28trn, with most of this accounted for by mortgages and equity release, said the Office for National Statistics (ONS). Debts related to buying a home accounts for £1.16trn, or 91 per cent of what the country owes.
The research covers the two financial years from April 2016 to March 2018 – with the findings compared to the previous two years from April 2014 to March 2016.
Total unsecured borrowing amounts to £119bn, up by £12bn over the two-year period, with £32bn of this taken up by student loans (see table below).
Hargreaves Lansdown personal finance analyst Sarah Coles said: “Not all these debts are the same: there’s a world of difference between taking an affordable, low-cost loan for vital home improvements, and living on your overdraft month after month, because it’s proving so difficult to make your salary stretch to the end of the month. But if you’re one of the 44 per cent of people who see their borrowing as a burden, it’s worth taking steps to deal with your debts.”
Wealth of the nation
The ONS data showed that 4.6 million households have hire purchase debt – up from 3.9 per cent to £6bn, amounting to £3,500 per home.
Credit and store card debt lifted 4 per cent to £1bn.
The poorest 10 per cent in the country, have debts three times larger than the value of assets they hold, while the richest 10 per cent have total wealth is 35 times larger than total debt.
Separate ONS data also released today, showed that the net wealth of British households had surged 13 per cent in real terms to £14.6tn, due to increases in private pension and net property rises.
Borrowing breakdown – UK unsecured debt
£35bn in non-student loans
£32bn in student loans
£25bn in hire purchase
£22bn on credit and store cards
£3bn in overdrafts
£1bn in mail order debts
£1bn in arrears on bills