ONS data reveals British mortgage debt has hit £1trillion

Posted 4 August 2015 by Nick Parkhouse

New data from the Office for National Statistics has revealed that property debt in Great Britain has reached £1tn. The estimates show that in 2010 to 2012 the total financial debt for Great Britain was estimated to be £104bn, an increase from £96bn in 2008 to 2010.

The news comes as experts have urged households to undertake a “financial healthcheck” to ensure they are able to cope with rises in interest rates.

The ONS data also shows that half of households owning their main residence with a mortgage owed at least £80,000, and that London had the highest median property debt across the six years. In 2010 to 2012, it recorded a median of £131,000 in debt, followed by the South East with £105,000. In comparison, the lowest median property debt came from Wales (£56,000), the North West (£62,000) and the North East (£63,000).

The ONS figures show that 19.8% of households reported a “heavy financial debt burden” with over a third of the 10% of lowest earners reporting the same.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, says: “There is a real risk that after more than six years of record low interest rates, many mortgage-payers are still living in a false sense of security. The reality is that they may have a very short window in which to prepare for coming hikes in interest rates.

“Just last week, the Governor of the Bank of England placed interest rate rises firmly on the horizon, with commentators expecting a rise as early as the New Year. Households urgently need to conduct a financial healthcheck to make sure they will be able to cope with higher costs – be they higher mortgage payments or higher interest payments on outstanding balances on credit cards and personal loans.”

Keith Osborne, editor of new homes portal Whathouse.com, says: “The recent comments from the Bank of England hint that an interest rate may be coming in the next few months. With over £100bn now secured on British property, even a small base rate rise could result in many thousands of homeowners facing difficulties maintaining their mortgage payments.

“Considering the government has also recently announced changes to the Support for Mortgage Interest scheme, it is vital that borrowers ensure they are in a position to continue to afford their repayments. That may include locking into a fixed rate to provide security or to analyse their budget to make sure they have spare cash to afford higher repayments.”

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