Mortgage debt passes £1 trillion

An extra £9.3 billion was borrowed in May, which taken with credit card debt and other forms of credit, means that consumer debt now stands at £1.2 trillion.

However, Drew Wotherspoon of John Charcol, believes that this should not be an immediate cause for panic: “While £1 trillion in mortgage debt is a huge sum, when you consider the fact that there is an unmortgaged property wealth of around £3.6 trillion, this means that the UK’s loan-to-value is a mere 22 per cent, which is healthy to say the least.”

Yet the rise in credit has led others to become concerned, particularly at Citizens Advice where it says that it now deals with 1.25 million people with debt problems.

And Barry Naisbitt, chief economist at the Abbey said that consumer spending growth was not picking up which could destabilise the economy.

So while Ms Wotherspoon said she did not expect a crash in house prices in the immediate future, the rise in personal debt has given concern to many others.