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Debt 'mountain' easy to climb

Fears about the UK's personal debt 'mountain' appear to be overblown, the latest research from the Bank of England indicates.

The vast majority (96 per cent) of the UK's £1.3 trillion personal debt is tied up in mortgages, according to the bank's latest figures.

Moreover, some 85 per cent of homeowners have at least £20,000 in equity, meaning they could remortgage or sell-up if required to clear debts, while rising house prices mean that the proportion of equity-rich homeowners is higher than five years ago.

However, there has been a ten per cent increase in the number of renters in debt over the past decade, but at the same time more than two in five Britons have no debts whatsoever, a figure that has remained fairly static since 1996.

More importantly, fewer than eight per cent of mortgage holders have had a problem making repayments.

"Most of those who reported problems repaying their debts said that this was because of temporary cash-flow problems or because of overspending," said Matt Waldron and Garry Young of the Bank of England's monetary assessment and strategy division.

They added: "Most expected to resolve their debt problems by cutting spending.

"The vast majority of mortgagors appeared to be comfortable with their debts."

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12/12/2006 09:37:02

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