UK household debt hits record high of £1.5 trillion

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British household debt has soared to a record high of more than £1.5 trillion, marking the fastest pace of debt growth since before the financial crisis.

The latest figures released by the Money Charity show indebtedness grew by more than £52 billion in the 12 months to the end of September, from £1.45 trillion a year earlier. 

It means the average UK adult owes £30,000, about £1,046.58 more than the same time last year, marking the fastest rate of debt expansion since before the credit crunch. 

Average individual debt - measuring the amount owed on mortgages, loans and credit cards - now accounts for about 113% of average earnings, and 82% of annual economic output across the UK. 

Total credit card debt alone rose to £65.7 billion in September, while mortgages accounted for 87% of total individual debt. 

But British indebtedness is set to keep climbing. 

The Office For Budget Responsibility said last year that it expects household debt to reach £2.55 trillion in the first quarter of 2021, amounting to average household debt of £94,481. 

That would nearly double the current level of household debt of £55,683 - which also accounts for mortgages. 

Michelle Highman, chief executive of the Money Charity, said: "When we see these record levels of debt, it's important to remember that there is nothing necessarily wrong with borrowing. It is a good way of paying for things you can't afford up-front like university or your house.

"But with interest rates so low at the moment, it's easy to think that high levels of debt are manageable."

However, Ms Highman said that an interest rate hike by the Bank of England could be on the cards as inflation starts to soar. 

The latest inflation forecasts released by the Bank of England last week claimed that inflation could rise to 2.7% next year, partly as a result of sterling devaluation following the Brexit vote. 

Ms Highman added: "More inflation means higher interest rates, which we'll all have to pay on our mortgages, loans and credit cards. If you're in debt, particularly if you have a variable mortgage, it's time to prepare by taking control of your finances."