The latest figures to be released from the Office of National Statistics reveal the total amount of property debt in the UK has surpassed the £1 trillion mark. This focuses on the total amount outstanding for property debt on someone’s main residence and also on any further properties someone might own.
Not surprisingly, property owners in London had the highest amount of debt on average. This was calculated to be £131,000 between 2010 and 2012, the period for which figures were made available. The South East of England was in second place with a median property debt amount of £105,000. Those living in Wales had the lowest median amount. This came in at just £56,000. Obviously properties in Wales are worth less than those in London and the South East of England, hence the sharp disparity between the two.
Consequences for the future
The amount of debt currently owed across the UK in this sense has many people concerned for the future. If the Bank of England does choose to raise interest rates – as many believe could happen – this will result in higher mortgage payments for many. It is uncertain whether property prices will continue to rise or whether they will stagnate to some extent.
The figures also revealed which parts of the country could be shoring up problems for the future in terms of meeting those monthly repayments. For example around a third of Londoners were currently finding it a struggle to meet their mortgage payments. In sharp contrast, less than 16% of Scottish mortgage holders said the same thing – less than half those who said the same in London. If interest rates do indeed go up, those figures could rise.
Record amounts of debt paid off so far this year
However the news is certainly not all bad. According to official statistics from the Bank of England, mortgages are also being paid off far more quickly than ever before. The first three months of this year have seen £13 billion deducted from the total amount owed in mortgage payments in the UK.
This contrasts sharply with the picture seen before the economic crash of a few years ago. Back then people were drawing equity from their homes to pay for extensions and other significant purchases. Now they are focusing on paying back as much of their mortgage as possible. At the same time last year, a total of £11.1 billion was paid off mortgages across the UK. As such the figure has increased by almost £2 billion in just 12 months – quite a significant jump.
The figures reveal an interesting situation with regard to those who have mortgage debt at present. The idea of paying off as much as possible while interest rates are low is a smart one. No doubt some people will manage to pay off their mortgages in full before rates do eventually go up. Maybe this is the general idea – to make the most of the low rates while we still have them.