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Debt problems: Household Finance

22/02/2011

Debt problems appear to remain a curse for the family finances of the UK, according to Household Finance Index from research company Markit.

The survey for February 2011 shows the prospects for household finances look to be at their weakest point for almost two years' time.

The report is also punctuated by the heightened fears among Britian's younger generations.

Household finances are said to be displaying their lowest levels of health since March 2009, as around one third of households report a worsening of their circumstances at present.

Just five per cent of people meanwhile reported an improvement in their finances outlook.

Among the demographics to be suffering from the worst situations are mortgage holders, public sector employees and 18 to 24 year-olds.

And expendable income appears to have declined at its fastest pace since the start of the survey in February 2009.
Senior Economist at Markit, Tim Moore, says: "High inflation and job worries has caused households to report that their financial outlook has slumped."

Kevin Still, debt solutions expert from Atlantic Financial Management backed up this concern saying: “For many households, with budgets already stretched, the temptation is to reduce payments on unsecured borrowing, like store and credit card debts, paying back the minimum. All the time the debt is increasing with interest charges. However, whilst these debts must not be ignored, when push comes to shove, meeting increased mortgage repayments must be the first priority. There can be nothing more devastating than losing your home and that’s a very real risk when you fall behind on mortgage payments. Sadly we see many cases of clients who haven't been able to make the distinction between priority and non-priority payments, with the result that they put their property at risk." ADNFCR-2613-ID-19952864-ADNFCR