Mortgage debt hits £1 trillion

2.12.47pm BST (GMT +0100) Wed 31st May 2006

Following the release of the latest Bank of England 'Lending to Individuals' figures it is now clear that UK households have debts secured on housing (mortgages and other secured loans) in excess of £1 trillion (£1,000,000,000,000). The milestone is likely to have been passed earlier this month. The figures released today show that at the end of April the figure secured on dwellings was £999.2 billion. Commenting Liberal Democrat Shadow Chancellor, Vince Cable MP said: "Debt secured on housing has now risen over 140% since Labour came to power and is equivalent to around £50,000 per household in the UK.

"With two million households living on a financial knife-edge and a further half a million households already in serious financial difficulty paying bills and meeting debts, any rise in interest rates or changes in personal circumstances could spell disaster.

"With many analysts now predicting the next move for interest rates will be upwards there are obvious knock-on effects for mortgage repayments."

In the late 70's and early 80's the average house price was around £22,000 and average wages around £5,000 the figures for 2005 are £188,000 and £22,400 respectively. House prices have risen at twice the rate as wages. Mr Cable said:

"First time buyers are worst affected by the recent rises in house prices with the average price they pay exceeding £150,000. With the average first time buyer deposit now at around £24,000 it's not surprising that more and more young people are relying on their parents for financial support.

"Despite the promises of New Labour we are faced with greater inequalities in income and wealth than ever under the Tories. The booming housing market is certainly a major cause of this."