Mortgage debt reaches £1 trillion in the UK

Mortgage Debt

Mortgage Debt - Credit: PA Wire/PA Images

The amount of debt held by homeowners in the UK has risen to £1trillion, an increase of £96 billion since 2008-10, according to the latest data from the Office of National Statistics.

London has the UK’s highest average property debt at £131,000. This is depressing news in the light of possible mortgage increases on the horizon.

Property debt is recorded as the total outstanding value of the mortgage on a household’s main residence and additional properties.

Half of households owning their main residence with a mortgage owe at least £80,000, which is an increase from the figure of £50,000 in the last survey that covered the years 2008 to 2010.

London has the highest median property debt across the six years of the research, standing as it does at £131,000. This was followed by the South East with £105,000 and the lowest, which is in Wales, at a mere £56,000.

Overall individuals in England are estimated to have an average debt of £3,600 in 2010 to 2012. Despite the number of households with financial debt decreasing over the years of the survey, the median value of the financial debt has risen from £2,800 in 2006.

Jeremy Leaf the owner of a Jeremy Leaf & Co and a former chairman of RICS said: “These figures are quite shocking, almost like lottery numbers and off the scale. It is a real danger that it is shoring up a real problem for the future, although in London it has slightly less impact with such a large percentage of buyers paying directly with cash”.

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Households reporting their debt as a heavy burden has decreased slightly from 20.4 per cent to 19.8 per cent.

Londoners are the most likely not to find their debt a problem, with 34.6 per cent of mortgage holders saying their household debt was burdensome. In contrast, only 15.9 per cent of Scottish mortgagees found this.

In the country as a whole, 3.2 per cent of household’s highest wealth deciles reported that they have a heavy debt burden, while in the lowest decile this burden increases to 39.6 per cent

Altogether the highest proportion of property debt came from individuals aged 25 to 34 at £110,000 in 2010 to 2012. The lowest median value of property debt comes from the group aged 65 and over at £34,000, - which is expected - as payments of mortgages decrease over time. They are also more likely to report their financial debt as no problem at all. 57.4 per cent

In 2010 to 2012, the total financial debt for Great Britain was estimated to be £104 billion, an increase from £96 billion in 2008 to 2010.

The Wealth and Assets Survey (WAS) is a longitudinal survey, allowing household and individual comparisons over time