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Wednesday, 27 November, 2002, 16:39 GMT
Britons 'sensible' about debt
A credit card, a home and a car
It seems most Britons are in control of their finances
The vast majority of UK households use credit sensibly, with only a minority getting into trouble with debt, a government survey has found.


This research shows that the level of arrears has remained relatively steady in recent years but people are using credit to a much greater extent

Melanie Johnson, Consumer Affairs Minister
The study, which was conducted by the Department of Trade & Industry (DTI), concluded that most people were in control of their debts.

The DTI said the research provided the most detailed picture of consumer debt since 1989.

But separate figures released on Wednesday showed that the buoyant housing market is tempting more Britons to borrow against the value of their homes.

Credit commitments

The DTI survey quizzed 1,647 households about their credit commitments.

It found that consumers were the most likely to sign up to credit agreements in their 20s.

Two thirds of households surveyed had an average of 2.6 credit commitments.

However, credit use by people in their 30s and 40s was only a little lower.

Arrears steady

The survey concluded that most people had control of their indebtedness.

"This research shows that the level of arrears has remained relatively steady in recent years but people are using credit to a much greater extent," Consumer Affairs Minister Melanie Johnson said.

However, there is still a significant minority falling into the debt difficulties.


(People are) withdrawing the equity in their homes to fund large purchases through their mortgages rather than taking out structured loans.

Simon Pitkeathley, British Bankers' Association

More than one in ten households commit between a quarter and a half of gross monthly income to repaying a mortgage or other credit commitment.

However, only 4% of householders when asked said that they were currently in arrears with credit commitments.

Consumers it seems are willing to take on extra borrowing due to the rise in value of their homes.

Record lending

According to new figures from the British Bankers' Association (BBA), October saw a marked increase in mortgage borrowing as people took money out of their property to fund spending.

Mortgage borrowing increased by a record 5.63bn in October.

Compared with October 2001, borrowing to fund a home purchase increased by 29%.

But loans secured against property jumped by a dramatic 63%.

BBA executive director Simon Pitkeathley said the figures showed that people were "withdrawing the equity in their homes to fund large purchases through their mortgages rather than taking out structured loans".

See also:

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