Are consumers in London and the North East facing financial disaster?
The UK has been at the centre of concern over recent years as a result of spiralling consumer debt levels and the rising number of individuals and households that have had to seek financial assistance through IVAs or even bankruptcy.
And a recent report has indicated that consumers that live in London and the North East could be facing more financial troubles in the near future, after survey results showed that many are already expecting to face a very bleak financial future based upon their current debts and income.
According to the debt consultancy Thomas Charles around a fifth of people living in these areas could be facing severe financial problems in the near future. According to the result of the report, which were revealed to the Observer, around 22% of consumers living in these areas are expecting to either seek assistance through an IVA (Individual Voluntary Arrangement) or to declare bankruptcy in the future. The survey was carried out earlier this year by YouGov, and was carried out on over 2000 people from those areas.
In addition to having high mortgage debts, around 19% of those living in London have large amounts of unsecured debt according to survey results. The results also indicated that around twenty one percent of those living in the North East have large amounts of unsecured debt to pay off, although their mortgage debts are significantly lower than Londoners, with the average mortgage in the North East standing at under half of that in London.
It was also revealed that those that do not have a mortgage at all seem to be racking up the highest amount of unsecured debt.
An Alliance and Leicester official stated: 'Since July 2006, homeowners with mortgages have reduced their unsecured borrowings by an average of £197. This may be a response to higher mortgage rates. By contrast, households without mortgages to pay have continued to take out loans and use their credit cards - though at a much slower pace than in the past - on average increasing their unsecured debt by £98.'
Tom Smith
26th February 2007
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