Household debt soars as living costs rise
Average household debt has passed £10,000 as families struggle to cope with rising living costs, a study has found.
Insurance company Aviva’s latest Family Finances report shows the average UK Household now has £10,563 of debt, up from £9,314 in May.
Loans from family and friends are making up a growing proportion of the borrowing – which excludes mortgages – increasing from £701 in May to £1,545 in August. Six per cent of families use pay-day-loans, with single parents being the most like group to take up this form of borrowing.
Expenditure is up across most areas, particularly energy bills, which have seen annual inflation of 10.11 per cent, and now make up 5 per cent of family spending. Housing costs make up 19 per cent, and have increased 1.95 per cent over the last year, with the amount spent rising from £504 to £513.
Despite this the number of families who have to survive on less than £1,250 a month has fallen from 30 per cent in November 2011 to 22 per cent in August 2012. However there has also been a drop in families with an income of more than £2,500, down to 31 per cent from 36 per cent this time last year.
The research is based on findings from 14,000 people intended to be representative of the UK population as a whole.
This edition of the quarterly study also looked at ‘intergenerational living’. It found 73 per cent of UK family members have lived with another generation of their families beyond the age of 18. The most common form was young people continuing to live with their parents, usually for an average of three years. Twenty four per cent reported intergenerational living for more than five years, and 8 per cent for more than 10 years.
Louise Colley, head of protection sales and marketing for Aviva, said: ‘Generally we think of children becoming independent when they reach 18, but it’s clear many are relying on their families both financially and practically into their 20s and 30s and beyond. There’s also evidence of older family members living with relatives for companionship and care, so dependencies can occur at almost any point in families’ lives.’