Outstanding consumer credit lending in the UK rose to £225bn last year, with five million Brits weighed down by more than £10,000 of debt, new data has shown.
According to the latest Insolvency Trends report by TDX Group – an Equifax company – consumer debt is rising, while the number of people entering individual voluntary agreements (IVAs) is also trending upwards.
The TDX figures also suggest that almost two-thirds of the UK’s adults (63 per cent), started 2020 in some form of debt.
More young people are entering individual voluntary arrangements and trust deeds, with 40 per cent of new cases coming from people under the age of 35 last year.
Peterborough has the most IVAs per 10,000 people while London has the highest number per UK city but lowest per capita.
However, TDX Group said that while the overall view of outstanding consumer credit continues to increase, there are some factors that may lessen the impact on the debt industry.
Consumer monthly payments into an IVA have more than halved over the past five years and the average total unsecured debt level dropped to a record low in 2019.
Debt relief orders and bankruptcies continued at subdued levels, largely unchanged for the last four years.
Commercial debt firms continue to apply their focus on debt management plans, IVAs, and trust deeds, whereas the more charitable organisations continue to offer debt relief orders and bankruptcies.
UK consumers made net repayments on their credit cards for the first time in almost seven years and households across the country reined in their spending.
The Bank of England reported the first monthly fall in credit card debts since July 2013 after borrowers repaid around £100m in November to reflect fading demand for consumer credit.
The annual growth rate in unsecured consumer lending dropped to 5.7 per cent from 6.1 per cent in October, as households limited their spending on credit cards.
The report also found that the insolvency market continues to consolidate, with Creditfix acquiring two new books in 2019, Pinnacle and Pareto.