UK Finance stats: Increasing debt, Jamie’s Italian – a warning sign that arrears and repossessions will increase further

Mark Pilling, MD at Spicerhaart Corporate Sales comments on the latest household finance update stats from UK Finance, he says the fact credit card spending and overdrafts are up and more problems on the High Street eg Jamie’s Italian last week, shows wider problems across UK consumer financial affordability could be a warning sign that arrears and repossessions will increase further.

He says: “The latest stats from UK Finance reveal that mortgage lending is down 3.6%, but all other forms of household debt have risen, with credit card spending up 11.7%, the amount outstanding on overdrafts up 0.9% and the value of new personal loans are up 7.8%.

“Earlier this month, the Money Charity stats also revealed a worrying picture in terms of household finances. It revealed that the average real wage is down 5.3% since the pre-crash peak in February 2008, that credit card debt is now £2,638 per household as people start having to put everyday expenses onto credit cards.

“Last week, we saw the real impact of these tightening household budgets on the High Street as another ‘casual dining’ business – Jamie’s Italian – went into administration. Add this to the ongoing Brexit saga, which is affecting consumer and business confidence, and we have a perfect storm.

“Troubles in the retail and casual dining sector and rising debt have always been a sign of what is to come, and these figures today also paint a worrying picture. In Q1, mortgage arrears and repossessions rose for the first time in years, and I think we will see a more significant rise at the end of Q2.

“We work with lenders across the UK managing their arrears and repossessions to find the best solutions for them and their customers. Lenders should try and identify any borrowers who are already having difficulties managing their mortgage – or are likely to in the future – and take action before repossession becomes the only option.”