The nature of consumer debt is changing, says Harrington Brooks
The latest analysis of the UK consumer debt industry, compiled by leading debt management firm Harrington Brooks, has shown that the nature of the sector is shifting as short term credit becomes less attainable and the cost of everyday living soars.
The firm’s latest Let’s Talk About Debt report has revealed that the influence of payday lenders and other short term credit providers has decreased, as the Financial Conduct Authority’s (FCA) reforms of the sector begin to take hold. The results have been startling. The percentage of Harrington Brooks’ customers with a payday loan in the last year has fallen significantly.
However, the decrease in consumer credit lending has meant that the cost of living crisis has been laid bare like never before. So called ‘priority bills’, such as utility charges, council tax and mortgage payments, are placing an ever increasing strain on the finances of ordinary people. Drawing on statistics produced by StepChange, the report highlights that gas and electricity arrears have grown by 4 per cent across the UK between 2010 and 2014.
Indeed, Harrington Brooks expects this trend to continue. Its analysis shows that just a 0.5% increase in interest rates on a property worth £250,000 would increase mortgage payments, on average, by £73. For households that are already struggling to make ends meet, such an increase could be disastrous.
Commenting on the report’s findings, Matthew Cheetham, CEO of Harrington Brooks, said “We welcome the fact that people have become less reliant on short term credit, but we are concerned that little has been done to address the underlying trend of the rising cost of everyday living. We are therefore cautious about the debt outlook for the rest of 2015, but hope that continued economic growth will improve the circumstances for our customers.”
Press release - Harrington Brooks