Britain’s people are mortgaging their homes to escape crippling credit card repayments. Most people see this as a more economic way of dealing with their debts. This phenomenon however is increasing the country’s overall debt.
UK’s debt has reached alarming peaks and the only way in which families can escape their crippling credit card repayments is by mortgaging their homes.
The amount of finance that Briton’s owed to financial institutions such as banks and building societies increased by £10.5bn in January, according to figures from the Bank Of England.
The numbers released by the bank also shed light on the growing phenomenon: households are switching their debts with credit cards, personal loans and overdrafts into mortgages.
The total amount owed by Briton has increased to £1,168nbn- comfortably above the country’s annual economic output.
Chief UK economist at Deutsche Bank, George Buckley, stated that the “debt creep” was not slowing but that the type of debt taken in is changing.
Mr. Buckley also noted out that it was likely that many families were also “over mortgaging” when buying houses, borrowing extra under the pretence of improving their homes. Instead many are using their money to pay off more expensive debt.
Experts fear that families are relying too much on their homes as stores of wealth and that some may struggle if interest rates unexpectedly rise.
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