What’s the Average Household Debt in the UK? [19+ Intriguing Stats]

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Debt has become a pressing issue for the UK population, with the number of households holding debt and an amount owed building with no end in sight. Statistics on the average household debt UK residents hold show that the debt crisis should be a cause for national concern. Every day millions of households are struggling and an increasing number of people are living in poverty.

Average Household Debt UK Residents Have: Fascinating Facts

  • The total debt owed by the UK population at the end of July 2021 amounted to £1.7 billion.
  • More than half of the adult population living in UK cities owes a certain amount of money.
  • Debts statistics for the UK show that 63% of UK adults have personal debt.
  • The average unsecured household debt is £12,800 – this includes credit card debt, personal loans, car loans, and other unsecured debt.
  • When we take mortgage debt into account, the total amount owed rises to £64,007 per household.
  • Each house repays £1,630 a year in interest rates, or £857 per person, which is 3% of the average annual income.
  • The average UK debt has reached a boiling point – approximately every 5 minutes, a person declares bankruptcy/insolvency.
  • 15 million people, or 23% of the UK population, are living in poverty and battling crushing debt.
  • The higher the household income, the larger the debt – high earners are approved for larger mortgages.
  • That being said, mortgage loans are the largest debt contributor in the UK.

How Much Money Is Owed?

The current financial crisis led to the accumulation of even more debt and the average debt in the UK has reached a peak; the numbers showing never-before-seen amounts of debt. So, how much do the British owe exactly?

#1 UK citizens owe £1.7 billion in debt

(The Money Charity)

According to the last annual report, in July 2021, the British owe £1,741.7 billion! When compared with the average total debt from the previous year, that’s an increase of £62.9 billion or £1,189 per adult!

#2 The average household debt is £62,670 per residence

(The Money Charity)

The household debt in the UK, including mortgage debt, is £62,670 or £32,931 per adult household member. The debt owed per person is 109.3% of the average earnings of a UK-employed adult, enticing people to look for ways to get additional income.

#3 The average British household owes £12,800 in unsecured debt

(Daily Mail)

The average unsecured debt of a UK household amounts to £12,800, which is divided among credit card debt, car loans, and numerous other personal loans, representing the average household debt without a mortgage. However, the largest portion of this debt is given to credit cards – credit card loans have seen a 40% rise, amounting to £72.3 billion in debt on a national scale.

#4 Households with mortgage debt owe £126,000 on average

(NimbleFins)

The largest portion of the UK household debt is due to secured loans, more specifically mortgages – the total amount owed in mortgage debt when divided by the number of households with a mortgage shows that the average mortgage debt per household is £126,000.

#5 The average personal loans debt per household is just over £5,000

(NimbleFins)

Each household owes approximately £5,233 in debt accrued from personal loans, student loan debt not included. If we factor in this, the average UK household debt rises to £10,145 per residence. It’s safe to say that student debt is crippling for British youth – this is more evident if one looks at the stats concerning student debt in the UK.

Who Is Affected by Debt?

As we’ve seen, the debt levels of the UK population are concerning; it’s also important to see who owes the most. Age, sex, ethnicity, and annual income are all determining factors in the amount of money owed.

#6 23% of the UK population lives in poverty

(Big Issue)

The UK average debt saw a significant rise during the COVID-19 pandemic. Before the global outbreak, 14.5 million people were living in poverty. Now, another 700,000 people have been plunged into debt due to the virus, taking the total number of people living in poverty to well over 15 million. This number shows that a staggering 23% of the UK population is living in poverty.

#7 Households with residents between 18 and 34 have the most debt

(NimbleFins)

The debt levels peak in households where the head of household is between 18 and 34 years old – the average non-mortgage household debt in this age group is £10,400. Generally, the older people get, the less debt they owe. This being said, people over 75 have the smallest average household debt at £4,400.

#8 Men have more debt than women

(NimbleFins)

Men have a larger amount of personal debt than women – the average personal debt for a man is £2,800, while women have £1,80036% less. However, men and women are equally likely to have financial liabilities; the debt to income ratio in the UK is almost identical for both at 0.16 and 0.15 respectively.

#9 Ethnic minorities have higher levels of debt than the wider population

(IPPR)

People of Black, Asian, and other minority descent in the UK tend to owe more than the rest of the population – their debt reaches an average of 18% of their annual income, as opposed to 12% among other groups.

#10 63% of the UK adult population owes a certain amount of debt

(Money.co.uk)

Household debt UK statistics show that 63% of UK adults have some kind of debt. People living in cities are especially vulnerable – the financial burden of city life is evident when more than half of city dwellers owe money, stimulating people to seek tools to help them organize their finances.

What Are the Consequences of the Debt Crisis?

The UK economy, like other world economies, has taken a serious hit in the past year. Debt is crippling many households, but which areas of life does it influence the most?

#11 17% of working families are seriously affected by the current recession

(Child Poverty Action Group)

One in six (17.4%) working households is struggling to make ends meet. The average household debt for the UK in 2021 increased, with families with children being affected the most due to childcare costs. This is even more prevalent in single-parent households – 44% of children from single-parent households live in poverty.

#12 There has been a 48% increase in rent costs

(Child Poverty Action Group)

A large part of the population can’t afford to buy property because real estate prices have skyrocketed in the past few decades, making people retort to renting. However, the rent costs have increased by 48% in the last 25 years alone! In more recent years, people are facing high unemployment rates and wage stagnation, which leads to the accumulation of debt.

#13 Every 5 minutes, a person is declared bankrupt or insolvent

(Finder)

The average debt in the UK has increased to the point where 280 people are declared bankrupt/insolvent every day. Approximately one person is determined to be unable to pay every 5 minutes alone!

#14 Before the pandemic, 14 properties were repossessed every day

(Finder)

Property repossession was a big problem in the UK before COVID-19 – 14 properties were taken away daily. However, these numbers have significantly lowered due to the pandemic moratorium, with just one repossession a day in 2020.

#15 Households with higher income have more debt

(NimbleFins)

The greater the income, the higher the debt – debt statistics for the UK show that people in the highest income brackets owe the most, with £7,200 on average. This is five times more than the lowest income debt brackets.

The Average Household Debt UK Has: At a Glance

We’ve covered the numbers, the percentages, and the population groups most affected by debt – now let’s see what else there is to learn.

#16 £958 million of debt was written off in 2021

(The Money Charity)

In 2021, lenders wrote off £958 million of debt; out of this, £366 million was credit card debt. When divided, it amounts to £4 million being written off a day.

#17 Each household pays £1,630 in interest rates a year

(Finder)

When discussing UK household debt, we have to consider the interest rates – every household pays £1,630 in interest repayments on a yearly level – that’s £857 per person. This sum is equal to 3% of the average earnings of an employed Brit.

#18 The largest amount of debt is due to mortgage loans

(Financial Conduct Authority)

The average UK debt is significantly increased by the amount owed in mortgage debt – the outstanding value of all mortgage debt in the UK in 2021 is £1,584.1 billion – with a 46% rise from the previous year.

#19 Consumer credit lending is the second-largest contributor to the average total debt

(Finder)

The UK population owes £206.7 billion in consumer credit. Out of this, £61.4 billion is in credit card debt – or, £2,204 per household in credit card debt alone.

#20 The UK household debt to GDP ratio is 96.6%

(CEIC Data)

In the last quarter of 2020, the household debt of the nation accounted for 96.6% of the country’s GDP, seeing a 1.6% rise from the previous quarter.

Wrap Up

Debt is a problem for which the British can’t seem to find a solution. With rising rates of unemployment and an income rise nowhere in sight, the debt crisis will only get worse before it gets better. The average household debt UK residents have accumulated is becoming bigger every year, and an increasing number of people are living in poverty. Sadly, the UK debt situation has never seemed bleaker.

ABOUT AUTHOR

I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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