Personal Debt: a Game of Snakes & Ladders?

Online, September 2, 2009 (Newswire.com) - Personal debt is a pressing current social issue: whilst it is by no means a recent revelation, its prevalence and its impact upon society can be seen as having increased of late. Noticeably, since documentation of its occurrence began in1993, the UK has only witnessed a rise in the level of overall personal debt held by citizens.

The BBC has reported that consumer credit, composed mainly of loans and hire-purchase agreements, fell during July, 2009 for the first time in around 16 years.

However, this lower figure of personal debt can only be seen after a rise of £92m calculated against borrowing on credit cards is considered. It is yet to be witnessed whether the trend of an increase in individuals seeking debt help, such as a credit card IVA, will continue.

Similarly, it is also worth noting that there was a marked increase in mortgage approvals throughout July which normally serves as a remarkably accurate indicator of the economy's health.

Existing mortgages were also subject to good news as the total amount outstanding on mortgages within the UK dropped by around £400m as people took advantage of the lowest Bank of England interest rate in history.

Those with tracker or variable rate mortgages may have seen monthly expenditure on their mortgage repayments slashed by over half. As the figures indicate, the UK have become more prudent with money with many continuing to make payments at interest rates experienced prior to the current 0.5% rate currently set. As such, individuals are paying off their mortgage capital more quickly and lessening their personal debt.

Adrian Coles, of the Building Societies Association, told the BBC that in the wake of the collective amount of savings in the UK diminishing, there would be "[hindering] the ability of banks and building societies to lend money to potential home buyers."

He also added: "such a low forecast for 2009 suggests that savers will actually withdraw more money than they deposit this year across the entire savings market."

This highlights that while the amount of personal debt held in the UK has reduced, it has come at the detriment of placing money aside in case of emergencies - a fundamental element in successful budgeting. Whilst it would appear that the UK have become more prudent in their debt management, it would also appear that they still have a journey ahead of them.

This press release was provided by www.IVA.net who provide free, no-obligation information and tools on debt and the issues surrounding debt solutions.