UK households increasingly comfortable with debt burdens

Rising numbers of consumers say they meet commitments ‘without any difficulties’
British households do not share regulators’ worries about rising levels of consumer debt, according to official data suggesting consumers are feeling more confident than ever about their ability to handle their debts.
Almost two-thirds of respondents to a large-scale survey by the Office for National Statistics said they were keeping up with their credit commitments without any difficulties, the most positive response since it began questioning households on the issue in 2010.
Thousands of households were questioned on their credit commitments and debt burden between July 2016 and June 2017, as part of the ONS’s Wealth and Assets Survey.
The percentage of households that said keeping up with bills and credit was “a struggle from time to time”, dropped to 24 per cent, down from 26 per cent in the 2014-2016 period, and 31 per cent when the question was first asked between 2010 and 2012.
The proportion of households where non-mortgage debt was “not a problem at all” also increased to its highest level on record, while the number reporting a “heavy burden” edged down to its lowest level.
Record-low interest rates have made it easier for consumers to repay debts, but several regulators have raised concerns that their borrowing is approaching unsustainable levels, which could create difficulties if the Bank of England proceeds with plans to lift interest rates further after last November’s rise. The data released by the ONS on Monday were gathered before the BoE signalled its intention to start raising rates.
The country’s largest banks have reported households drawing down on their savings at increasing rates in recent months, and separate data released by the ONS in December showed households have been borrowing more than they save for the longest period on record.
In addition to the positive encouragement offered by low interest rates, consumers have also been driven to borrow more to sustain their spending habits in the face of rising inflation and weak wage growth, which have pushed disposable incomes to what the ONS has described as “historically low” levels.

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