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More than 4 million fear they`ll be made redundant Consumers took on more mortgage debt in July Debts called in by parents Teenagers `scared of debt` Rising household costs could pressure people in debt Pensions debt may impact workers` retirement funds Welsh young adults `at highest risk of debt problems` Over 50s can`t afford to enjoy retirement because of debts Budget: tackling the nation`s debt Short-term debt: `no need for price control` The cost of clearing debt Education debt Tackling the national debt Number of mortgage deals on offer exceeds 3,000 Almost 5 million take on debt to pay household bills OECD: household debt more than 120% of disposable income Petrol price falls help people in debt Amount of mortgage debt taken on at lowest level in ten years Northern Ireland sees significant IVA rise Overdraft debt `becoming more expensive`

Personal debt drops - first time ever

14/09/2009

The total amount of debt owed by individuals in the UK has actually dropped, making July 2009 the first ever month in which consumers on the whole have ended up owing less, rather than more.

On 1 September, the Bank of England released its `Lending to individuals: July 2009` statistical release, which showed that total net lending to individuals fell by £600 million in July.

As this was `net` lending, it meant that the population had, on the whole, repaid more debt than it had taken on during the month of July.

This was true of both secured and unsecured debt: the amount of secured debt dropped by £400 million, while the amount of unsecured debt fell by £200 million.

To put July`s figures into perspective, the BoE`s `previous 6 month average` figure shows that in each of the past six months, the total amount of debt had grown by an average of £800 million.

Many people have taken advantage of the historically low base rate to pay off some of their debt more rapidly. The BBC gives an example of a homeowner - Mr Richard Otten - whose interest payments on his mortgage had fallen from £1,800 per month to just £200 over the past 18 months. Rather than spending the cash, or saving it, he had chosen to overpay his mortgage debt.

This is a move that can seriously reduce the length of someone`s mortgage - and since they`re clearing the debt more quickly, they can save a lot of money in interest over the remainder of the mortgage.

"I left my repayments as they were, so what`s in practice happening is that I`m paying off capital much faster than I would otherwise have been doing, and therefore the length of my mortgage is reducing very significantly," said Mr Otten.

According to the latest figures, the total personal debt in the UK now stands at £1.4569 trillion - or £1,456,900,000,000.

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