Irresponsible lenders are pushing people into debt, but regulators are “asleep on the job”, a charity warns.
Citizens Advice says its staff dealt with a record 1.7 million debt problems during the last 12 months, an increase of 20% on the previous year.
The charity says it is working hard to help more people deal with their financial problems.
But it wants the financial services industry to do more to tackle irresponsible lending.
The director of public policy at Citizens Advice, Teresa Perchard, said: “Time and time again, we come across people in desperate straits who need not be there if the firm who lent them money had acted responsibly on day one.
About two million adults – around 7% of the population – are “very concerned” that they may not be able to pay their debts.
Despite the rises in the interest rate over the past year, a quarter of consumers have increased their borrowing over the past three months, while one in 14 owes an extra 20% or more, research has found.
Those adding to their debt could be heading for serious problems, says price comparison website MoneyExpert.com. A survey of more than 2,000 UK adults revealed that just under a quarter were debt free, with 40% saying they were not worried about their ability to manage the money they owe.
One in five is yet to pay off a mortgage and one in three is racking up average credit and personal debt of £5,900.
With many people buying a home later in life and state pensions not keeping pace with inflation, there are fears the problem will only get worse.
A report from Scottish Widows paints a worrying picture.
The total debt of those over 65 has hit £57 billion, according to the investment company, while pensioners’ average credit card and personal loan debt has risen by 42 per cent in the past year.
Kate Jopling, of the charity Help the Aged, called the figures “worrying”.
“With one in five retired homeowners still paying a mortgage and one in five pensioners living in poverty, the future looks pretty bleak.”
Eight million Britons have unsecured debts of more than £10,000 and are struggling to meet monthly repayments, according to new research.
Debt on credit cards and store cards is largely to blame for the soaring levels, which have risen considerably over three months. In April this year 14 per cent of people owed £10,000 or more.
That proportion now stands at 18 per cent – almost a fifth of all adults, according to Thomas Charles, a debt consultancy firm. The research also showed that a quarter admit that they regularly struggle to meet repayments.
The research comes as the Bank of England’s Monetary Policy Committee debates its sixth interest rate rise in less than a year, which will push even more people into debt.
Rates were increased to 5.75 per cent last month – their highest level for six years.
The Bank has already been warned by business leaders that another rise will cause “serious economic damage” and would be “very dangerous” for the housing market and industry. Many families are struggling as the cost of living – particularly fuel and food – keeps increasing.
Students at UK universities were lent more than £3bn in the last financial year, it emerged today.
The Student Loans Company said the total lent to all students during the financial year 2006-07 for English, Welsh, Scottish and Northern Irish universities was £3.4bn.
This compares with £2.9bn lent the previous year.
Provisional figures for the current academic year show English and other EU students studying at English universities were lent a total of £2.9bn, of which £386.5m related to tuition fee loans.
Almost half of UK households require more than one salary to maintain an acceptable standard of living, a new study claims.
Research from Scottish Widows found that 44 per cent of families were dependent on two or more salaries to pay the bills and live comfortably.
This figure rose to 49 per cent for families raising one child, and 51 per cent for households with two children.
The study reported that the levels of household debt also increased with children.
The average two-child household is saddled with more than £100,000 in mortgage and unsecured debt, it found.
This compares with families with no offspring who have around £82,000 in secured and unsecured debt.
According to the study, even though many families rely on more than one salary, a large proportion have not set aside enough “rainy day” money to help them in the case of redundancy.
More than a quarter of those questioned had no savings at all, while a further 25 per cent had banked less than £3,000, figures showed.
Average debt levels have risen to an all-time high of nearly 140 per cent of income, twice the level it reached in the 1980s, the Financial Services Authority said yesterday.
“There is a risk consumers could be unprepared and ill-equipped for a weaker economic environment and hold an over-confident view about the future,” the organisation’s Financial Risk Outlook for 2007 warned. Figures yesterday showed that repossessions had risen 65 per cent in a year. Experts said homeowners are taking on huge levels of debts to get their first step on the housing ladder.
The UK’s total stock of personal debt has risen to £1.3 trillion, making Britain one of the most indebted nations in the world. More than 17,000 people had their homes repossessed last year, according to The Council of Mortgage Lenders.