Experian releases UK debt figures

News release

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Bruno Rost
Press Relations Manager, Business Strategies
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bruno.rost@uk.experian.com Email

Experian releases UK debt figures.

Nottingham, UK, 18 March 2008 - For the first time, global information services company, Experian, has released data on total debt levels for major towns and cities in the UK. The new UK debt report[1] provides details on debt balances for all outstanding mortgages, credit cards, loans and overdrafts for major UK towns and cities.

The report shows that total outstanding balances on UK borrowing rose 9.24 per cent over the past 12 months from £1.061 Trillion to £1.159 Trillion. However it reveals that debt growth has slowed from the previous twelve months period, where the increase was 14 per cent.  

Although mortgages showed the largest increase, the Experian debt data reveals that credit card growth was relatively flat over the past 12 months and balances on unsecured lending has actually decreased. This suggests that borrowers may have been switching to more affordable types of credit as well as making concerted efforts to reduce their outstanding balances. 

The data also suggests that lenders have been implementing credit tightening policies well before the widely reported credit crunch of August 2008. It shows that growth in lending has slowed markedly across all key credit products and credit tightening on cards, loans and mortgages was already well established in advance of the so-called credit crunch.

-                      Looking at combined debt balances by town/region (i.e. mortgages, loans, HP, credit cards and overdrafts), the analysis shows that Northern Ireland has experienced the largest change per head, up almost 23 per cent over the last 12 months. This is followed by Kensington, Chelsea, Wandsworth, Hammersmith and Wolverhampton.  At the other end of the scale, areas that have shown the least increase are Aldershot, Dartford, Ilford, Bishops Stortford and Newport on the Isle of Wight.

-                      Total credit card borrowing has not increased significantly over the past 12 months (+1.25 per cent) and has slowed over the last two years, where it rose by 2.4 per cent.

-                      The flat, almost negligible growth in credit card balances suggests that consumers themselves have also taken a more responsible approach to borrowing, looking to lower cost and more affordable credit products or even to cut down on borrowing altogether.

-                      Penzance, Bromley, Skipton, Eastleigh and Bromsgrove have experienced the largest rise in credit card balances. On the other hand frugal Falkirk, Birmingham, Weymouth, Dunfermline and Widnes have made the most efforts to reduce their credit card balances.

-                      Mortgage balances have risen 10.8 per cent over the past 12 months, however this rate has slowed from the previous 12 months, which registered a 16.4 per cent increase.

-                      The growth in mortgage balances may also be a function of many lower cost 3 and 4 year fixed rate mortgages coming to an end and borrowers taking up higher priced variable rates.

-                      The growth in mortgage balances is largely down to the effect of house price inflation and geographical analysis of balance changes shows it has occurred in areas where prices have risen in the last 12 months.

-                      The average increase in mortgage balances was in line with UK house price increases in 2007, and less rapid than in 2006, suggesting that there may already have been belt tightening pre-August. Otherwise it is interesting that in 2006, the main growth in balances was in the relatively less affluent northern centres, while as last year it was mostly blue chip London locations, Scotland and Northern Ireland (both of which saw strong growth) and a few bits and pieces elsewhere. This partly reflects the concentration of house price growth to London and the devolved nations, but may also show a flight to quality by lenders.

-                      Northern Ireland, Kensington, Chelsea, Wandsworth and Wolverhampton have experienced the largest rises in mortgage balances. In most instances this is a reflection of the buoyant housing market in these areas, though perhaps not in Wolverhampton. At the other end of the scale, Aldershot, Dartford, Ilford and Bishops Stortford have experienced the smallest rises in mortgage costs per head, suggesting a slower housing market alongside greater efforts at belt tightening.

-                      The total balance on loans has actually decreased  by 0.38 per cent, compared with an increase of 2.9 per cent in the previous 12 month period.

-                      Looking at loans Hartlepool, Rotherham, Redcar, Middlesbrough and Chelsea have increased their balances most. Cirencester, Poole, Welwyn, Windsor and Dorchester have made most efforts to reduce their loan balances.

ENDS…

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About Experian’s Business Strategies division
Experian’s Business Strategies division is one of the UK's leading economic forecasters and provides an understanding of consumers, markets and economies in the UK and around the world, past, present and future. Its focus is consumer profiling and market segmentation, retail property analysis, economic forecasting and public policy research, supporting businesses, policy makers and investors in making tactical and strategic decisions. As part of the Experian group, it has access to a wealth of research data and innovative software solutions.

The division’s economic research team is devoted to analysing national, regional and local economies for a range of public and private sector clients. Its statisticians, econometricians, sociologists, geographers, market researchers and economists carry out extensive research into the underlying drivers of social, economic and market change.