Public survey on debt and personal finances conducted for R3 published 3 December 2010
Date Published: 03 Dec 2010
Categories: Economy | Financial Services | Politics | Public and communities | UK
A third of people expect their finances to worsen in 2011
A third of people (30%) believe that their financial situation will worsen over the next six months, according to a quarterly survey by R3, the insolvency trade body - an increase of 7 percent on the last quarter. The number of people who believe that their financial situation will improve has fallen from 35 percent to just 22 percent.
R3 President, Steven Law commented:
“Since we last carried out the survey, the government has issued the Comprehensive Spending Review that announced job cuts and welfare cuts, so it is unsurprising that fewer people are feeling optimistic about their financial outlook. In many cases of personal insolvency the contributory factor is a sudden change in circumstance, such as losing a source of income, which makes repaying outstanding debts difficult. With personal debt hitting record highs and job cuts looming, many people will be feeling vulnerable.”
The research shows that the number of people who are worried about their current level of debt has remained steady, with four in ten (39%) expressing concern. In the West Midlands, people are most likely to worry, with half of those surveyed saying they are worried about their debts. In London, one in four are concerned.
Credit card debts continue to dominate the concerns of those who are worried about their debts, with 47 percent saying this accounts for their worries. Of those concerned about their debts, over a quarter (28%) of people are concerned about how far they are into their overdraft. Amongst those who worry about their debts, concern about mortgage repayments has jumped 4 percent - from 19 percent to 23 percent - since the last survey.
Steven Law continued:
“I see many people who are concerned about their credit card debts as, worryingly, they rely on them for day-to-day purchases. Unfortunately, I fear that the number of people worrying about their levels of credit card debt is set to grow.
“The jump in the number of people worrying about their mortgage repayments may be due to the fact that, typically, the value of a mortgage repayment tends to be higher than the monthly repayment on a credit card. The higher value of this debt may make a mortgage repayment seem more difficult to pay each month. Many may be concerned that their repayments will increase when interest rates start to rise. People who feel that they are struggling with their personal debt should seek professional advice on managing their household budget as soon as possible.”