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British households to accrue nearly 10,000 pounds of unsecured debt by end of 2016: report

Xinhua, March 24, 2015 Adjust font size:

The average British household is expected to owe close to 10,000 pounds (or 14,920 U.S. dollars) in unsecured debt by the end of 2016, more than ever before in cash terms, said PricewaterhouseCoopers (PwC) in a report published Monday.

Data showed that total outstanding unsecured borrowing grew by nearly 20 billion pounds in 2014, or nine percent, its fastest rate of growth in at least a decade, to reach 239 billion pounds or close to 9,000 pounds per household last year, surpassing its pre-financial crisis peak in cash terms.

Around 46 percent of the increased debt was for students loans, the accountancy firm headquartered in London estimated.

Total household debt, including secured debt, to income ratio is projected to reach around 172 percent by 2020, exceeding its previous peak during the financial crisis, said the report.

Simon Westcott, director and consumer debt expert at PwC, commented: "Underlying this significant growth in overall unsecured borrowing, we also saw changes in the way people borrow. Old favorites such as credit cards are staging something of a revival, while newer forms of borrowing such as peer-to-peer lending are starting to gain ground."

"Despite our survey revealing a relatively high degree of confidence among consumers about their ability to stay on top of their debts, affordability of the UK's household debt pile may come under pressure in the coming years," he said.

PwC also warned about the risk in interest rates to Britons' debt burden.

"PwC analysis indicates that a two percent rise in interest rates on total household debt (including secured debt) would leave households needing to find an extra 1,000 pounds a year just to cover the additional interest costs," said the report. Endit