UK Borrowers Starting To Reduce Loan Debts
It would appear that since the effects of the credit crunch are finally being felt by the majority of the UK population and with the prospect of a looming recession to look forward to, the penny has eventually dropped for many individuals with personal loans and credit card debt, as they begin to make a special effort to actually repay some of their debts, according to a new survey from Unbiased.co.uk.
The survey has shown a marked shift in the nation’s financial priorities, as for the first time since the survey was started eight years ago, there was a net reduction in the amount outstanding on personal loans and other debts over the course of the third three months of the year.
In total, borrowers managed to pay off around £23 billion more of loan debt than they took out in new loans. But it would seem that borrowers have given up saving in order to repay their loans, as net saving levels dropped over the same period to a low of £19.3 billion, which was almost half the level of savings made during the second three months of the year.
This shows a huge change of emphasis in the attitude of people in the UK. During the second quarter of the year, for every pound put into savings, 15 pence was taken out in new personal loans, whereas over the course of the third quarter, for every new pound in savings, we actually repaid £1.24 of debt.
This shows that individuals are starting to become concerned about their financial future and want to get their financial affairs into the best shape they can during uncertain times.
Although it is commendable that people are repaying their loan debts, the fact that savings levels have dropped so significantly is a concern, although this could be accounted for by falling interest rates on savings accounts and a general lack of consumer confidence in the banking system at the current time.
