The average UK household will have unsecured debts of £10,000 by the end of 2016, according to accountancy firm PricewaterhouseCoopers (PwC).
The figure includes spending on credit cards, bank borrowing and student loans, but does not include mortgages. The total amount of non-mortgage debt equated to nearly £9,000 per household in 2014, the report said. This would demonstrate a new high in cash terms that consumers have been in debt.
PwC revealed that unsecured borrowing increased by £19.7bn last year, or 9%. Almost half of this was a result of higher student loans, 22% due to increased borrowing on credit cards and the rest from other sources including loans and overdrafts. Nearly half of the increase – 46% – in borrowing last year came from students, PwC said, warning that graduates who started university after 2012 could leave with an average debt of £40,000 to £50,000.
However, a survey conducted alongside the report suggested that most consumers are confident about paying off those debts. One reason for such confidence may be the continuing low level of interest rates, which means that borrowing is cheap. The PwC report said that even though most people were in control of their debts, that could be tested when interest rates eventually rose.