Getting more people onto the housing ladder has led Brits to accumulate a record level of debt.
According to Bank of England figures, individuals owe a grand total of around £1.43 trillion, which overtakes the previous record set prior to the financial crisis.
The figures are propelled by higher mortgage debts, which have risen steadily as a result of several government-backed schemes.
Conditions have continued to improve for first-time buyers, which is where the larger debt values have emerged.
Average rates on a 2-year fixed rate mortgage at 90% have fallen to 4.42% in October, the Bank’s figures show. This shows a fall from 4.56% in September and from 5.64% in October 2012.
The Bank announced yesterday that the support offered to the mortgage market through the Funding for Lending Scheme would end in January, when the function of the scheme would be redirected towards lending to businesses.
The Bank’s governor, Mark Carney, said there was “no longer a need for FLS to provide further broad support to household lending”, as credit conditions have improved for lenders.
Unsecured Lending
Unsecured lending, which has risen in line with the recovery, showed a slight fall in October.
A drive in consumer spending is thought to have propelled the 0.8% growth in GDP recorded in the third quarter.
But unsecured lending rates are continuing nudging upwards again. Average credit card rates remain close to 18% - over half a percentage point higher than October 2012 – while average overdraft rates remain above 19.5%.
Rates on personal loans worth £5,000 reached a low of 10.11% in August after registering an average of 14.03% last November. But they have since risen to 10.36% in October.
Rates on personal loans worth £10,000 have risen to an average of 6.25% in October after reaching a low of 6.10% in July. However, rates are still well below the average of 7.48% recorded in October 2012.
We’ve seen plenty of opportunities for homeowners to reduce their mortgage rates as rates have fallen over the last 12 months. But credit card rates show no signs of following. Can you reduce your credit card debts at a lower rate through a 0% balance transfer offer?
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