Unmanageable: Soaring rents and mortgages fuel massive debt surge

Local TV

Rising mortgages, rent hikes, and mounting interest charges are pushing more people into financial difficulty. Experts warn the growing debt crisis could seriously affect living standards and long-term stability.

Transcript

00:00Well, there's no doubt that people whose incomes are relatively fixed, maybe going up by a

00:06couple of percent, are finding bills are coming in far in excess of that, certainly in terms

00:11of council tax and the charges for the use of water and sewage and so on and so forth

00:16from the water authorities and indeed utilities.

00:19Yeah, they're things you've got to pay, as well as, of course, rent and mortgages.

00:24So therefore, of course, if you're going to do something which, of course, is maybe not

00:28an essential, and I've talked about things like holidays, you'll stick them on the credit

00:32card and pay off the minimum.

00:34So the fact that people are maxing out on, and in some cases not one, not two, a multitude

00:40of credit cards is a consequence of this.

00:42The difficulty is, of course, it means that household debt collectively has gone up and

00:46at some point it's all going to have to be paid off, but, of course, people are living

00:50the hope that things will get better.

00:52Now, rising personal debt isn't just about spending habits.

00:57It's closely tied to external factors like higher interest rates and growing housing

01:01costs.

01:02The situation has become critical as more families struggle to cover everyday expenses,

01:07pushing them further into debt.

01:10The last big financial crisis we had was a consequence of the so-called global financial

01:15crisis.

01:16That was subprime property in America, which, of course, proved to be a really bad investment

01:22for many of the holders of the debts.

01:26I don't see this happening in the same scale.

01:29The fact is, when you talk about credit cards, you're often talking about APRs, the percentage

01:33rate that you pay on that, 30%.

01:37So of course they charge more.

01:38So I don't see the rates that are going to be charged on credit cards massively going

01:43up.

01:44The difficulty is, I suppose, for those who are really in dire financial straits, you

01:47then go to money lenders and, of course, we see advertisements for lenders and, of course,

01:54you get APRs of many times 20% or 29% and 30%.

01:59So there's a difficulty.

02:02A financial crisis is not imminent, but the difficulty is that as debt balloons, then

02:08of course people cut back on the spending on other things.

02:12And so it creates a vortex, if you like, that people get sucked into, and of course that

02:16can be really debilitating.

02:18And we see it in terms of retailers, they go to the wall, which, of course, means joblessness

02:23goes up.

02:24And, of course, we get into this general cycle of negativity, which drags us all down.

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