# Personal debt in the UK



## Murt10 (6 May 2006)

"Nineteen per cent of the adult population - about eight million people - now have unsecured debts of at least £10,000"

I wonder are things as bad as this here.

http://money.guardian.co.uk/creditanddebt/debt/story/0,,1765661,00.html


Murt


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## lff12 (7 May 2006)

Its a bit exaggerated sometimes.
Unsecured personal debt can just mean a car loan - and loads of people have them.

The real problem in the UK is a small hard core of borrowers who getting more and more into trouble as a result of extra charges and higher interest rates, and the growth of subprime lending, which is making things worse for people already in trouble. In fact nobody points out that a lot of people clear their caredit cards in full every month.

I do have a theory that the UK is near credit saturation point and a lot of lenders are starting to offer services in Ireland as an untapped market - which means lending sometimes to more risky customers.  The big picture in the US again is risk-based pricing and the growth of subprime lending - which means offering different rates dependent on risk and to riskier borrowers in the case of subprime lending.


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## DrMoriarty (8 May 2006)

A grim picture is painted [broken link removed], and backed up by more telling statistics — e.g. a 57% rise in court orders to repossess homes...


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## colc1 (8 May 2006)

DrMoriarty said:
			
		

> A grim picture is painted [broken link removed], and backed up by more telling statistics — e.g. a 57% rise in court orders to repossess homes...


 
Is this basically what some 'fortune tellers' (myself included) would tell you could well happen here, well I doubt it will get that extreme here but who knows another few interest hikes by the ECB and who knows??


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## Neffa (8 May 2006)

colc1 said:
			
		

> Is this basically what some 'fortune tellers' (myself included) would tell you could well happen here, well I doubt it will get that extreme here but who knows another few interest hikes by the ECB and who knows??


 
I think the interesting thing is that many people in the UK who are heavy borrowers had become used to paying off loans by MEW (mortgage equity withdrawal) as house prices rose. If your house price is growing at 10% p.a on a £500K property, that's £50K to play with for your new car etc.

As this went on, they thought/think that their debt was manageable. However, since mid/late 2004, house price growth has slowed or turned negative in some areas, this escape route has closed off which is now having a marked effect in terms of personal finances. 

I think that this quite likely to affect people in Ireland who have been following the same path if local house prices do slow/fall slightly as interest rates rise.


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