Third of millennials borrowed over £1,000 last year
NEARLY a third (30 per cent) of consumers aged 18 to 25 borrowed more than £1,000 over the past year, research shows.
Equating to around two million people, it is the highest proportion of any demographic.
The report from Equiniti, the consumer credit technology provider, suggests increasing rents, stagnating wages and the recent 0.25 per cent interest rate hike are putting greater pressure on the finances of young people.
Nearly half (46 per cent) said they had taken out a loan of over £1,000 in order to plug an unexpected shortfall in their finances.
In contrast, just 13 per cent said they had borrowed more than £1,000 to widen their monthly budget, implying they are not regularly relying on credit to make ends meet on a month-by-month basis.
The report, released on Monday, found young adults are not borrowing recklessly but are comparing rates and shopping around when accessing the credit market.
For example, four in 10 borrowers compared over five separate loan providers when taking out a loan, and 90 per cent used an online comparison website to weigh up available rates.
It comes after the Financial Conduct Authority’s Financial Lives report found 31 per cent of young adults feel comfortable using credit.
Richard Carter, managing director of credit services at Equiniti, said that with wages failing to keep up with inflation, credit is one way in which young adults can cope with financial shocks.
But he added it is crucial they are protected from falling into perpetual debt, which may damage their long-term economic prospects.