Rising debt ‘has not ruined householders’

According to the study, the number of low-income households struggling with unsecured debt fell between 1999 and 2004, regardless of whether the house was owned or rented, the Guardian reports.

However, the poorest members of society are still at risk of high-level debt because they do not have access to mainstream credit, making them vulnerable to the advances of loan sharks, according to the Institute for Fiscal Studies.

“Tenants  and lower income households generally  maintain a greater risk of running into difficulties with repayment,” said Richard Disney, who compiled the report.

“High and rising utility bills provide a continued threat to household finances and slowing growth of real incomes may prove a problem for such families.”

In terms of secured debt, the report found that it had risen way above incomes as houseowners increased their mortgages instead of borrowing from unsecured sources.

According to the British Bankers’ Association, loans and overdrafts increased by £4.2 billion in 2006, although there was a 15 per cent fall in value on 2005. Meanwhile, credit card lending fell by £1.8 billion, compared to an increase of £1.6 billion in 2005.