Unmanageable: Soaring rents and mortgages fuel massive debt surge

National World - LocalTV

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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