“A nation in debt” is a commonly used statement to describe Britain’s current financial situation. But why are we all in debt? Are we buckling under the weight of increasing interest rates?, are mortgage payments to high? Or are we trying to inadvertently accumulate wealth? Well according to a recent report, surprisingly, none of the above is the major cause.
According to newly released data, the average Britain’s primary reason for gargantuan personal debt, stems from a desire to live above and beyond one’s means. The average cost of living has rose substantially over the last few years, whilst net earning’s have remained relatively stagnant, as a result personal debts have grown. Logically, consumers should be holding back they’re spending and curbing their current lifestyles, unfortunately however, increasing debt does not seem to be the deterrent that perhaps it should be.
The research shows, that rather than reducing the rate of new credit acquisition, consumer credit lust has actually increased. New personal loan and credit card agreements have been up, month on month for the last few years. It would seem that people are unable to let go of a lifestyle they are used to, and refuse to adjust due to changing financial conditions.
A separate report by a leading home loans lender has suggested that the average consumer can only afford a home valued at £140,000, however the majority of people are buying homes valued well into the 200K mark. Many lending institutions are tightening the reigns on such consumers, and have implemented stricter qualifying criteria as a result. In addition, many personal loan lenders and other credit institutions are rejecting a record amount of applications to combat the trend.
