The average UK household will have unsecured debts of \u00a310,000 by the end of next year, according to accountancy firm PricewaterhouseCoopers (PwC).<\/p>\n
The figure includes spending on credit cards, bank borrowing and student loans, but excludes mortgages.<\/p>\n
It would be the largest amount in cash terms that consumers have been in debt.<\/p>\n
However, a survey conducted alongside\u00a0the report suggested that most consumers are confident about paying off those debts.<\/p>\n
One reason for such confidence may be the continuing low level of interest rates, which means that borrowing is cheap.<\/p>\n
According to PwC, unsecured borrowing increased by \u00a319.7bn last year, or 9%.<\/p>\n
It said the average household owed “close to \u00a39,000” in 2014.<\/p>\n
The most recent report from the Bank of England put the figure at \u00a38,000.<\/p>\n
One reason for the increase is the amount of money being borrowed by students.<\/p>\n
Nearly half of the increase – 46% – was accounted for by student loans.<\/p>\n
Borrowing on credit cards was responsible for 22% of the rise, with the rest from other sources, such as loans and overdrafts.<\/p>\n
The PwC report said that even though most people were in control of their debts, that could be tested when interest rates eventually rose.<\/p>\n
It warned that the size of debts in relation to household income could exceed its peak, which occurred in 2008, just before the financial crisis.<\/p>\n
“Consumers could begin to feel squeezed once again,” said Simon Westcott, a director in PwC’s financial services business.<\/p>\n
As far as secured lending is concerned, the Bank of England has previously said that a sudden rise in interest rates could leave more than 600,000 families vulnerable to a rise in mortgage rates.<\/p>\n
However, it said in December that overall household debt levels were below the long-term average.<\/p>\n
Source: www.bbc.co.uk<\/p>\n","protected":false},"excerpt":{"rendered":"
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