Bank of England reports sharp drop in debt 'concern'

Sterling The average outstanding mortgage is £87,000 according to the BoE

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A survey for the the Bank of England says there has been a sharp drop in the number of households concerned about their debts.

In 2013, 39% of households were worried about debt, compared with 46% last year, the report says.

But the Bank warned about the potential impact of future rises in interest rates on borrowers.

The number of people worried about the affordability of their debts was unchanged from 2012.

"While debt servicing costs were also broadly unchanged, a significant increase in interest rates at current incomes may increase financial pressure on households with a mortgage," the report said.

Among households with mortgages, 8% are paying out 35% or more of their incomes on servicing those loans.

But if interest rates were to rise 2.5 percentage points, the proportion of people supporting that repayment burden would double to 16% - assuming no rise in incomes.

The survey showed that the average outstanding mortgage was reported to be about £87,000 and average pre-tax monthly income was £2,701, up slightly from £2,631 a year ago.

Meanwhile, the Bank has been looking into the effects that rising interest rates would have on households.

If interest rates were to rise from the current level of 0.5% to a more normal 3%, without any increase in household incomes, it estimated that holders of 50% of UK mortgages would have to either reduce their spending or find more work.


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  • rate this

    Comment number 177.

    'Didn't the BBC recently report the average houshold debt including mortgage was £41K.
    Now aparently the average mortgage is £87K!'

    Not everyone has a mortgage. Some are tenants and older households have probably paid off.

  • rate this

    Comment number 176.

    My bank "tries" to get me into debt at every possible moment, this week i've had my bank offer me a loan and increase my credit limit all because i'm being sensible with my money.

    Luckily i am not stupid enough to take it.

    Maybe an entire financial system based on "Selling Debt" isn't as good as it suggests??

  • rate this

    Comment number 175.

    Bank of England reports sharp drop in debt 'concern'

    That's because no one gives a damn anymore!

    Lower the interest rate more money for the fat cats... they're not stupid, BOE are on our side are they - they're very upfront about taming all the bonuses and gold plated pensions - not a whisper!

  • rate this

    Comment number 174.

    5 Minutes ago
    Nakor @ 31 is right... It's cos we don't care anymore!

    correct we are all condem(ed). A dying man doesn't care about much

  • rate this

    Comment number 173.

    I'm one payment off being debt free apart from my mortgage - and what do I get from my bank? An email asking me if I want another loan!

    They obviously aren't concerned with debt.

  • rate this

    Comment number 172.

    Ironic really since the only other HYS is on the growth of pay day loans

  • rate this

    Comment number 171.

    Debt is a way of life - what else is a 'mortgage'?
    As for the B of E - lying shysters.

  • rate this

    Comment number 170.

    "Households not concerned about debt" Is that because after the customers money bailed out the banks they had their home repossessed? Urgo no household. (Forgive the cynicism, I'm just very fed up with what banks get away with and, the people that prop them up, don't)

  • rate this

    Comment number 169.

    I think people have got to the point where, if they were to carry on worrying about debt, would probably go and jump off a bridge somewhere, so the simple answer for them is just to stop worrying and try to enjoy their upcoming christmas as much as they can. Unfortunately politicians are blind and deaf to just how serious a problem personal debt is to the man in the street.

  • rate this

    Comment number 168.

    @ 162.whambam

    My comment survived for 2 minutes but I am a patient man and I trust the impartiality of the BBC 100% and so I am sure the HYS on rendition will open soon. Meantime I will check up on my debt levels and see how comfortable I feel.

  • rate this

    Comment number 167.

    The question should be, how to ween the population off debt without bankrupting or forcing people into unsustainable poverty?

    Raising interest rates may please the savers, but those encouraged into debt will be forced under the water.

    The banks being the major cause of debt, having encouraged credit cards on people who should not have had them. Are still raising credit limits...why?

  • rate this

    Comment number 166.

    Having been told that by the new Governor of the BofE that interest rates will remain low for the next three years, fewer are concerned about their debts than before. However, since the old boom has now been resurrected the prospect of an increase in interest rates beckons. I would still recommend to anyone that as much debt as possible is liquidated as quickly as can be done.

  • rate this

    Comment number 165.

    People aren't concerned?

    Well don't worry, I'm sure they'll find a way to change all that. Can't have us living a stress-free life, can they?

  • rate this

    Comment number 164.

    Let us all go bankrupt and start again.

  • rate this

    Comment number 163.

    Over £1bn of loans are written off by banks daily

    £1.5 bn is the daily value of purchases made on credit cards

    A property is repossessed every 18 minutes

    Every 5 mins someone in made insolvent or bankrupt

    £162m was the daily amount of interest paid on personal debt in October

    National personal debt stands at £1.43 trn

    There might be a drop in concern but there isn`t a drop in debt.

  • Comment number 162.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 161.

    Nakor @ 31 is right... It's cos we don't care anymore!

  • rate this

    Comment number 160.

    of course banks are not concerned about debt. In fact they are more concerned if we had no debt. if we had no debts how would they make any money from us.

  • rate this

    Comment number 159.

    Gordon Brown and the Banks led the way in not being concerned about debt.

  • rate this

    Comment number 158.

    I'm tired of having nothing to look forward to so I think I'll get a loan for a holiday, new car, Playstation 4 with a couple of games and a new TV. People don't seem to be concerned that they have debts so surely it shouldn't be a problem for me.

    The cynic in me thinks that announcements like this are designed to bring out the above reaction in people. Surely not.


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