Despite the Credit Crunch, it's seeming as though Britain's debt mountain is continuing to grow. I've seen that personal debt in the UK has soared to £1.3 trillion recently, which seems pretty big in a nation of around 60 million inhabitants. In fact, it's £21,666.66 per person, including children! Over 80% of the debt is accounted for by mortgages, which is understandable seeing as property prices actually make me feel quite ill. If you thought house prices in the US were high before all the subprime issues, then you should check them out here. Most lenders say that the average residential property price in the UK sits at about £200,000, that's near enough $400,000 at the moment!
The crazy house prices mean that most people have to borrow eight to ten times their annual salary to make a house purchase, and banks have continued to dish out the mortgages - although the country is seeing something of a slowdown. I read a paper from PwC, the big accountancy firm, that predicts that there will be record numbers of insolvencies in the country this year. Not many people seem to think it will be anywhere near as bad as the subprime crisis back home, but things are definitely going to get a little sticky. For starters, 1.4 million people will be coming off their low fixed rate mortgages later in the year and their monthly outgoings will rise by an average of £140 unless they refinance. For people who are already on the fine line when it comes to making ends meet, it seems likely that this will tip them over the edge.
