Yorkshire family's average debt now £7,000 - not counting the mortgage

FAMILIES in Yorkshire are battling debts of more than £7,000 on average amid concerns that financial burdens have soared at an 'alarming' rate in only six months as households attempt to take advantage of cheap credit before interest rates increase.
Families' debts have jumped by an "alarming" 4,000 on average in the space of six months, a report has found.Families' debts have jumped by an "alarming" 4,000 on average in the space of six months, a report has found.
Families' debts have jumped by an "alarming" 4,000 on average in the space of six months, a report has found.

Research published today by finance experts at the York-based Aviva found that typical household debt has surged by 42 per cent since summer 2015 to reach the highest levels seen for two and-a-half years. Excluding mortgage borrowing, average family debt now stands at £13,520 – marking a leap of £4,000 from the average debt of £9,520 in the summer of last year.

The latest Family Finances report, covering winter 2015, fuelled concerns many families’ finances are finely balanced and continued availability of cheap credit is leading to households racking up debts on credit cards, overdrafts and personal loans which could become problematic when interest rates start to rise.

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The average figure nationally has been driven up by the debts seen in London and the South-East, but Yorkshire and the Humber still ranked as the region with the sixth highest debt with families owing an average of £7,110.

Aviva’s managing director for protection, Louise Colley, said while families’ increased savings levels compared with 2010 are to be welcomed, their finances are still “precariously balanced”.

She added: “The alarming levels of rising household debt, along with a recent reduction in income and savings levels, paints an uncertain picture for the family purse in 2016.

“With the possibility that the Bank of England could raise interest rates this year, families who have grown accustomed to cheaper credit – particularly those who have spent heavily over the Christmas period – need to ensure they are still fully prepared to manage debt repayments, as well as other monthly outgoings, should rates go up.”

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Recent Bank of England lending figures have prompted concerns from charities about the levels of credit being taken on by consumers. There has also been speculation that interest rates could start increasing this year, pushing up the cost of borrowing.

Aviva found that families in London owe £40,810 on average, excluding mortgage debt, giving them the highest regional debt burden per family and 10 times the average owed per family in Wales, at £4,060.

The report also found that the typical family’s monthly net income has fallen for the first time since July 2012, now standing at £2,024. This marks a fall of £102 compared with six months earlier.

Families are now saving £105 per month on average, which is 50 per cent more than in 2010, but less than six months ago, when the average amount saved per month was £113. Families typically have £3,150 saved up – which is only enough to keep a household going for about a month-and-a-half if there is an emergency.

More than 2,000 people aged between 18 and 55 years old from across the UK were surveyed for the report.