Personal Debt Breaks £4k

Personal debt has reached an all time high of £4,000 per person, according to the latest market research.

Datamonitor figures show the average unsecured debt per person in the UK is £4,021, an increase of 33.5 per cent since 2001.

Combined personal debt has reached a record level of £1.2 trillion and the situation is expected to worsen.

Borrowing for mortgages and loans is even easier and some 90 per cent of adults hold at least one credit card with recent competition between lenders resulting in better deals.

The Bank of England says unsecured debt write-offs jumped by 27.6 per cent to £3.7 billion in the first three quarters of 2005 compared with the same period a year earlier.

Last December, the four major banks agreed to share information to stop people getting into debt they cannot shoulder and the government is offering more advice to people to help them get out of financial difficulties.

Datamonitor says it looks like lenders are starting to take notice as they have said they will turn away increasing numbers of customers through stricter lending criteria.

Karina Purang, from Datamonitor, said: "As a result of increased indebtedness and lenders adopting a more precautionary approach to lending, consumers with a less than good credit history may find it more difficult to get access to cheap credit."

Although personal debt levels are the highest ever, borrowers do not seem concerned, as a Mintel survey showed last month that only five per cent of debtors were worried about their situation.