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Personal lending increases four times faster than wages | Personal lending increases four times faster than wages |
(about 9 hours later) | |
The value of outstanding personal loans in Great Britain has grown four times faster than wages, research by BBC News has found. | The value of outstanding personal loans in Great Britain has grown four times faster than wages, research by BBC News has found. |
Data published by UK Finance shows households had outstanding loans worth £37bn in 2016-17. | Data published by UK Finance shows households had outstanding loans worth £37bn in 2016-17. |
Christians Against Poverty (CAP) said January 2018 was its busiest ever month for people seeking debt advice. | Christians Against Poverty (CAP) said January 2018 was its busiest ever month for people seeking debt advice. |
The Financial Conduct Authority (FCA) said the "vast majority" of loans went to people who could afford repayments. | The Financial Conduct Authority (FCA) said the "vast majority" of loans went to people who could afford repayments. |
Statistics published by UK Finance, which cover 10 of the UK's biggest banks and building societies, shows the value of outstanding loans has increased by 25% since 2013-14. | Statistics published by UK Finance, which cover 10 of the UK's biggest banks and building societies, shows the value of outstanding loans has increased by 25% since 2013-14. |
In comparison, wage data from the Office for National Statistics (ONS) shows the typical full-time worker has seen pay increase by 6.5%, over the same period. | In comparison, wage data from the Office for National Statistics (ONS) shows the typical full-time worker has seen pay increase by 6.5%, over the same period. |
British households amassed £37bn in unpaid personals loans in 2017, an increase of £7bn from three years earlier. | British households amassed £37bn in unpaid personals loans in 2017, an increase of £7bn from three years earlier. |
In Northern Ireland personal loan debt is just over £1bn and has risen 4% since 2014. | In Northern Ireland personal loan debt is just over £1bn and has risen 4% since 2014. |
Rising living costs and small increases in pay mean some people say they have had to borrow money to survive. | Rising living costs and small increases in pay mean some people say they have had to borrow money to survive. |
'Borrowing to pay for food' | 'Borrowing to pay for food' |
Mel Reynolds, a mother of two from Batley, West Yorkshire, said: "My salary simply covered my mortgage and utilities, meaning I was borrowing money to pay for food. | Mel Reynolds, a mother of two from Batley, West Yorkshire, said: "My salary simply covered my mortgage and utilities, meaning I was borrowing money to pay for food. |
"There was a moment just before payday where I had five pounds left in my purse. | "There was a moment just before payday where I had five pounds left in my purse. |
"I didn't have petrol in my car so I was left thinking, do I spend the five pounds on getting to work, or making packed lunches for my boys? I chose to feed my kids." | "I didn't have petrol in my car so I was left thinking, do I spend the five pounds on getting to work, or making packed lunches for my boys? I chose to feed my kids." |
Ms Reynolds, who works full time for a car auction house, accumulated debts worth nearly £28,000 through bank lending and credit cards, between 2007 and 2015. | Ms Reynolds, who works full time for a car auction house, accumulated debts worth nearly £28,000 through bank lending and credit cards, between 2007 and 2015. |
"I get upset thinking about that period in my life because I know there are a lot of other people out there going through exactly the same situation now," she said. | "I get upset thinking about that period in my life because I know there are a lot of other people out there going through exactly the same situation now," she said. |
CAP, which has helped Ms Reynolds, said January had been its busiest ever month for people seeking help with their debt problems. It was founded in 1996. | CAP, which has helped Ms Reynolds, said January had been its busiest ever month for people seeking help with their debt problems. It was founded in 1996. |
Daniel Kelly, a manager at the charity, said: "We estimate about eight million people will be in their homes worrying about how they're going to be paying the bills." | Daniel Kelly, a manager at the charity, said: "We estimate about eight million people will be in their homes worrying about how they're going to be paying the bills." |
The data published by UK Finance covers 60% of personal loans made by banks and building societies in the UK - it excludes student loans, credit cards and payday lending. | The data published by UK Finance covers 60% of personal loans made by banks and building societies in the UK - it excludes student loans, credit cards and payday lending. |
The analysis by the BBC England Data Unit also revealed that: | The analysis by the BBC England Data Unit also revealed that: |
The Bank of England says households in the UK in total currently owe more than £1.5tn (including mortgage debt) and has warned that a sharp rise in personal loans could pose a danger to the UK economy. | The Bank of England says households in the UK in total currently owe more than £1.5tn (including mortgage debt) and has warned that a sharp rise in personal loans could pose a danger to the UK economy. |
Some charities are concerned people are receiving loans they will "never be able to repay". | Some charities are concerned people are receiving loans they will "never be able to repay". |
Sylvia Simpson, from Leeds-based charity Money Buddies said: "We had one client who came to see us who was signed up to a £20,000 loan from her bank, completely unsecured, and she was six months pregnant. | Sylvia Simpson, from Leeds-based charity Money Buddies said: "We had one client who came to see us who was signed up to a £20,000 loan from her bank, completely unsecured, and she was six months pregnant. |
"There was no way she was going to be able to start paying that money back while she was on maternity leave. | "There was no way she was going to be able to start paying that money back while she was on maternity leave. |
"We have clients that have said to us they were struggling with their debts and the banks are willing to offer them more money." | "We have clients that have said to us they were struggling with their debts and the banks are willing to offer them more money." |
The FCA, which is responsible for regulating the lending market in the UK, said it would take action against those who lend "irresponsibly". | The FCA, which is responsible for regulating the lending market in the UK, said it would take action against those who lend "irresponsibly". |
Director of strategy and competition Chris Woolard said: "Overall current levels of personal debt are around the long-term average but we are concerned about vulnerable consumers who could be exposed to high-cost lending. | Director of strategy and competition Chris Woolard said: "Overall current levels of personal debt are around the long-term average but we are concerned about vulnerable consumers who could be exposed to high-cost lending. |
"The vast majority of lenders are sticking to the rules which mean that when a bank lends money to someone it needs to make sure the repayments are affordable, and we will take action where we see our rules being broken". | "The vast majority of lenders are sticking to the rules which mean that when a bank lends money to someone it needs to make sure the repayments are affordable, and we will take action where we see our rules being broken". |
A UK Finance spokesperson said its members "are committed to lending responsibly to help their customers, and always undertake a thorough risk assessment of a customer's finances whenever they apply for credit." | |
They added: "The vast majority of borrowers repay their loans without getting into financial difficulty, but if a customer is struggling with repayments we would always advise they speak to their lender straightaway. | They added: "The vast majority of borrowers repay their loans without getting into financial difficulty, but if a customer is struggling with repayments we would always advise they speak to their lender straightaway. |
"It's also important to remember these figures don't reflect total borrowing or indebtedness by area, as they exclude other sources of credit such as car loans, payday lenders and student loans." | "It's also important to remember these figures don't reflect total borrowing or indebtedness by area, as they exclude other sources of credit such as car loans, payday lenders and student loans." |
For more stories from the BBC England Data Unit visit our Pinterest board. | For more stories from the BBC England Data Unit visit our Pinterest board. |
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