Debt & credit – Bank of England figures
The Bank of England has published its latest Trends in Lending report – its ‘assessment of the latest trends in lending to the UK economy’.
It’s split into three sections: ‘Lending to UK businesses’, ‘Mortgage lending’ and ‘Consumer credit’. Most people are likely to be more interested in the second and third sections…
Mortgage lending
Gross lending for house purchase (the total amount lent out, regardless of how much people repaid) in April was much the same as in March, although approvals were slightly down. The number of mortgage products advertised, however, has grown over recent months.
The latest Lending to Individuals figures from the Bank of England show that UK residents were collectively carrying £1.239tn of secured debt at the end of March.
Consumer credit
When it comes to unsecured debt, lenders reported that there was no significant change in either availability of or demand for credit in April.
At the end of March, according to the Bank’s latest Lending to Individuals figures, UK residents were collectively carrying £221.7bn of unsecured debt.
Looking back over the last 12 months, what has changed in consumer credit is the net lending – the amount of money lent out minus the amount repaid. All the way from July to November last year, people collectively repaid more unsecured debt than they took on (which means the net lending figures were negative).
But that hasn’t happened since November. From December to March, people borrowed £400m more than they repaid every month, on average. Even so, this is nowhere near the levels we saw before the credit crunch – in 2006, for example, people took on more than £1bn of extra debt (on average) every month.
Dealing with debt
So – according to the Bank, people are currently carrying around £1.24tn of secured debt, and over £200bn of unsecured debt.
The Council of Mortgage Lenders (CML) has commented on the relatively low numbers of repossessions – interest rates are low, lenders are working with borrowers to keep them in their homes, and unemployment hasn’t risen as sharply as expected. In fact, they’re hoping that their prediction of 53,000 repossessions this year will turn out to be pessimistic.
When it comes to unsecured debt, a lot of people are falling behind on their payments. Insolvencies are at an all-time high, but many people will find they can tackle their debt problems without entering an IVA (Individual Voluntary Arrangement) or bankruptcy – possibly by entering a debt management plan.
Debt management
Some may be able to negotiate with their unsecured lenders and agree on a new repayment plan that lets them clear their debt at a rate they can realistically afford. They may choose to do this themselves, or they may enter a debt management plan, asking a debt management company to negotiate with their lenders on their behalf.
There are drawbacks to either approach – repaying a debt more slowly can end up costing them more in total and can damage their credit rating, whether or not they actually join a professional debt management plan. Nonetheless, debt management can be the best way of clearing their debts without being declared insolvent.
Although you got in too much debt all by yourself, it’s not always as easy to get out of it on your own. The good news is that you don’t have to try to do it alone, you can get the help you need from a debt management company.