Three Million Homes Struggling in Debt

by Mark Johnston

According to research being complied regarding the problem of debt, data shows that a staggering number of  people are affected, an estimated three million  homes in Britain are having huge money difficulties as well as this above three million are financially insecure  as reported by debt charity Consumer Credit Counselling Service (CCCS).

The charity also reports more than one million people are having problems with paying their mortgage repayments, In the united kingdom one tenth of its population are facing severe shortfall in household income to keep them financially solvent and out of debt

This report also revealed the grim picture facing households that are already in substantial debt some of which were finding it difficult to keep up with debt repayments and looking  towards some insolvency action being taken against them. A further three million on the threshold of debt  due to ever increasing household bills.

After further analysis of Consumer Credit Counselling Service (CCCS) data revealed three distinctive debt rates the first clients with an average income annually managed unsecured debts of 20 percent more than their annual income, while the second clients earning twice as much as the first,who’s debt is comparable to 95 percent  of their annual income, this leaves the final household this one is receiving benefits and has a huge unsecured debt to income of 124 percent making this one the highest.

Even though clients in lower income had problems trying to meet houshold budgets between  2005 and 2010 thy lost thirty three pounds 6 percent of their income  leaving clients  with not enough to pay household bills or repay debts.

Further adding to the problems for people in the lower income bracket are expected increases in fuel, electricity and gas which in turn increases food bills,commuting to work,going shopping, taking children to schooljust to name a few. Reducing their income any more will push them further into deficit warns the Consumer Credit Counselling Service (CCCS).

Although tough times are approching for homeowners there is likely to be a rise in mortgage interest rates. For example a £100,000  repayment mortgage with an interest rate of  4.5% over 25 years currently pays £556 per month according to mortgage broker London and Country. If the rate increased 0.25% repayments would rise from £556 to £570 per month or £168 per year.

Further more with regards to mortgage borrowers a bleak picture has been drawn after recent analysis by Financial Inclusion Centre, which was gathered from Financial Services Authority figures. The analysis shows 760,000 mortgage borrowers are in some form of difficulty with lenders, whether it be over mortgage arrears, repossession or maybe benefiting from forbearance (when the lender agrees not to foreclose on a mortgage when borrowers fails to make payments).The figures have reached 1.2 million some 11% of overall number of mortgages are under financial stress.

Chairman of the Consumer Credit Counselling Service (CCCS) , Lord Stevenson,  said: “These figures confirm our fears – that troubled times lie ahead for many people in the UK. This report shows the pain is going to spread wider and affect many more people than many commentators have previously assumed.

“CCCS was contacted by almost 418,000 people last year, and our data reveals the stark realities faced by many decent, ordinary people who struggle to make ends meet in these difficult economic times. It is important that the complexities of their vulnerability are understood and addressed by government as well as the financial and charitable sectors.”

Gavin Kelly, the chief executive of the Resolution Foundation, agreed: “Many people who scraped through the recession are going to find the next few years even harder. It is very likely that there will be a significant rise in the number of households struggling to maintain their debt repayments, which is a major concern both for them and the wider economy.”

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