Borrowers undaunted by debt

Three-quarters of British borrowers claim to be comfortable with their debts, while 85% are confident they can meet repayments, according to figures published today.

Despite Bank of England figures showing consumer borrowing in the UK has reached almost £1.2 trillion, the survey by CreditExpert revealed that the majority of debtors were confident about keeping up with repayments on mortgages, loans and credit cards.

Almost one-third (32%) of those questioned said they expected their outstanding debts to decrease over the next six months, while only 11% said they anticipated their borrowing to increase.

In London, however, confidence was lower than elsewhere, perhaps as a result of high house prices and living costs.

Only 47% of respondents who lived in the capital said they felt confident about covering repayments, compared with other regions where the figure ranged from 74% to 91%. The most confident borrowers lived in the south-west.

The money education charity Credit Action puts the average UK household debt - including mortgage borrowing - at £47,546, with every adult owing an average of £25,195.

Government figures show that last year the number of personal insolvencies had reached the highest level since records began, while repossessions were also on the rise.

Advice charities have also reported increase levels of debt among people contacting them for help.

However, Rima Awad-Sanders, a spokeswoman for CreditExpert, said it should not be surprising that 75% of those questioned felt comfortable with their borrowing.

"A lot of people should be given credit for borrowing responsibly," she said. "Around 30 to 40 million people have credit agreements of some sort. Only a small number of the population are in difficulty."

The survey did not ask people what impact rising rates would have on their confidence, but a recent report by Alliance & Leicester claimed that rates would have to double from the present 4.5% to cause the same problems with repayments that were seen in the early 1990s.

The base rate has remained the same since last August's cut and minutes for this month's monetary policy committee meeting released today do not suggest that an increase in the near future is likely.