Select Language:

Citizens Advice warns on increase in Mortgage Debt

DWD

Citizens Advice warns on increase in Mortgage Debt

Citizens Advice said today that mortgage debt within its caseload had risen by 64% within the last year and by 1,801% since 2007-2008. The figures are taken from the Annual Report for the Citizens Advice ‘Dealing with Debt’ Service, which is in its fifth year of funding by the Department of Enterprise, Trade and Investment.

  • The 64% figure represents £9,038,508 in 2010-2011 up from £5,496,148 in 2009-2010.
  • When compared to pre-recession Mortgage Debt figures for 2007-2008 this is a staggering increase of 1,801%.
  • The graph below illustrates the steady increase in Mortgage Debt in the last five years.

Derek Alcorn, Chief Executive of Citizens Advice said:

“It is very clear from the figures in our database that if interest rates rise, many people will find themselves in trouble with mortgage repayments, and there is some evidence that lenders are already lengthening the term of loans.”

  • The Mortgage Debt trends shown by ‘Dealing with Debt’ figures are a consequence of the 2008 financial crisis and correlate with the latest repossession figures from the Northern Ireland Court Service.
  • Even a small increase in the Bank of England base interest rate could throw many more households into housing difficulties with 2% representing an extra annual cost of £3,000 per annum on an average interest only mortgage. Citizens Advice expects to deal with more housing repossession cases, with those in negative equity potentially pursing bankruptcy as a solution.
  • The ‘Dealing with Debt’ figures also shows that rent arrears has fallen in 2010- 2011, down on the previous year by 40%. However the average amount owed has increased by 60%. Citizens Advice has welcomed the introduction of Debt Relief Orders in June 2011 as a remedy for non-homeowners. The report also reveals a trend of decreasing consumer debts, with Mortgage Debt representing the largest debt amount for the first time since the service began.
  • Another emerging trend in the report is an increase in bank loan amounts, from an average of £6,644 per individual in 2009/2010 to £8,892 per individual in 2010/2011. This supports a trend observed by Citizens Advice Money Advisers of an emerging demographic of more clients from a business, banking, finance and property development background.
  • The service is accessible the website www.dealingwithdebt.org.uk or by calling 0844 855 2104. Calls are charged at the local rate.

ends

Notes to Editors:

  1. Citizens Advice is the largest advice charity in Northern Ireland working against poverty, meeting the information and advice needs of some 92,000 people per year and dealing with over 321,000 issues. Citizens Advice Northern Ireland has formal links to National Citizens Advice in England and Wales and close working relationships with Citizens Advice Scotland (CAS). Together the three associations constitute the largest advice network in Europe, with over 60 year’s experience of providing advice and information to the public.

  1. Since 2006 the ‘Dealing with Debt’ Service has been delivering Debt Advice funded by the Department of Enterprise, Trade and Investment. In the 2010-2011 financial year the ‘Dealing with Debt’ Money Advice Service funded by the Department of Enterprise Trade and Investment helped 2,500 people and handled over £37 million worth of debt. Money advisers have had to work hard to cope with the level of demand for services. They have dealt with increasingly complex cases and addressed £37,267,484 of client debt during the 12 months to March 2011. Overall, ‘Dealing with Debt’ statistics clearly demonstrate that the demand for debt advice services has continued to grow. Together the top 5 debt categories (Mortgage Debt, Credit Card Debt, Personal Loans, Secured Loans and Bank Loans) make up £29,615,823, or almost 80%, of the total amount of debt dealt with during the year.

  1. Citizens Advice continually monitors the demographics of those clients accessing the service and the statistics revealed the following:
  •  men and women continued to access the service in relatively equal numbers
  • respondents aged 40-59 accounted for the biggest group (45%) and those aged 25-39 were the second largest group (40%). Compared to the age groups in terms of population, those aged 40-59 account for 26% and the 25-39 age group account for 20%, these groups are grossly over represented, however, this can probably be explained by the fact that these age groups make the most major financial decisions and commitments. Those aged 60 or over accounted for 10%.
  • 36% of respondents were married and 34% were single with 23% of respondents giving their status as divorced or separated.
  • 53% of respondents relied on some form of benefits as their main source of income. This is down from last year’s figure of 58% highlighting a shift in client type.
  • Approximately 2% of respondents relied on some form of pension income
  • 30% of respondents had some form of disability. 18% had physical disabilities and 12% had mental health difficulties. This compares to 25% of the general population so clients with disabilities were over represented in the Dealing with Debt client base
  • 56% of respondents were owner occupiers. 18% stated they were private tenants, 11% were Housing Executive tenants and 2% were Housing Association Tenants. The 2009/10 figure for owner occupiers was also 56%, however the previous year’s figure of 2008/09 of 45%, demonstrates an historical considerable increase. The impact of the recession and the contraction of available credit have brought an overwhelming demand for debt advice both from the traditional client group of low income households and from more affluent clients, demonstrated by owner-occupier figures.
  • 96% of respondents were categorised as White with the remaining 4% as Other. Figures from the Labour Force Survey 2008 indicate that the population is 98.6% White and 1.4% Other. Therefore, it could be argued that the ethnicity groups (made up of 12 different categories) grouped as ‘Other’ are over represented in the Dealing with Debt client group.

 

Contact:

Jo Black

Dealing with Debt Project Manager

02890231120 (w)

07793031376 (m)

Derek Alcorn

Chief Executive

07714302304 (m)

02890262521 (w)

 

 

 

 

Visit Citizens Advice on Facebook (search for Citizens Advice Northern Ireland Facebook) and follow us on Twitter by visiting http://twitter.com/CABNIRELAND

Author
CAB News Editor
Published
13/10/2011