People could struggle to payback their loans in the next year if interest rates increase, commented an industry expert.
The predictions made for 2011 by Ed Bowsher, head of consumer finance at lovemoney.com, are not very promising. He pointed out that unemployment rates as well as debt are likely to rise.
This trend is particularly worrying as more and more people are finding it difficult to manage their finances. In addition to this, higher interest rates would only make it more difficult for consumers to pay back their loans, he added.
Mr Bowsher said: "I suspect the banks will have to write off plenty of personal debt next year. Unemployment will almost certainly rise in 2011 and that will mean more people will have no prospect of clearing their debt at all."
His comments follow in the wake of predictions made by the Office of Budget Responsibility, which stated that household in the UK could witness a large increase in their debt if interest rates begin to rise.
Recent UK debt statistics made public have revealed that household debt is likely to rise by £72,341 per family in the next four years.
Data released by Creditaction also confirmed that banks and building societies in the UK had written off debt worth £3.47 billion. Of this figure, £2.14 billion was found to have been incurred by consumers through credit card use.
Statistics also show that Brits at the moment owe more money in personal debt than what the country generates as a whole. At the end of July this year, collective personal debt owned by people stood at £1,456 billion, having seen a consistent growth of 0.8 per cent in the last 12 months.
Consumer credit lending has also increased by £0.2 billion, while secured lending grew by £0.1 billion. Overall borrowing in July reflected a rise of £0.3 billion, statistics show. |
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