The latest financial insights from The Money Charity for July 2024 reveal significant trends and data points that highlight the current state of personal debt, housing, spending, loans, and financial inclusion in the UK. These statistics provide a snapshot of the economic landscape and underscore the financial challenges and behaviors of UK residents.
Personal Debt in the UK
As of the end of May 2024, the total personal debt in the UK reached a staggering £1,852.8 billion. This equates to an average total debt per household, including mortgages, of £65,239, and £34,537 per adult, which is approximately 96.0% of average earnings. In May alone, net mortgage lending increased by £1.31 billion, while net consumer credit lending saw an increase of £428 million.
Mortgages, Rent, and Housing
Outstanding mortgage lending stood at £1,624 billion at the end of May 2024. With an average mortgage interest rate of 3.62%, households with mortgages are expected to pay an average of £5,469 in mortgage interest annually. The HM Land Registry reported that the average house price for first-time buyers in Great Britain was £238,284 in May 2024, marking a 1.8% annual increase and a 1.0% monthly rise. Meanwhile, private rental prices in the UK surged by 8.6% over the 12 months leading to June 2024, according to the Office for National Statistics.
Spending and Loans
Consumer behavior and spending patterns also showed interesting trends. In June 2024, the average number of cash machine transactions, including balance enquiries and rejected transactions, was 46.3 per second, representing a 7.7% decrease from June 2023. The number of ATMs fell from 50,300 at the end of 2022 to 47,711 by the end of 2023, a 5.2% decline. During Q1 2024, UK households spent £97.67 million daily on water, electricity, and gas, translating to £3.44 per household per day. Additionally, 49.8% of credit card balances were bearing interest as of March 2024, based on UK Finance figures.
Financial Inclusion
Financial inclusion remains a critical issue. In 2022, the Financial Conduct Authority (FCA) reported that 1.1 million adults in the UK did not have a bank account, representing 2.1% of the adult population. The FCA Financial Lives Survey from May 2022 revealed that 3.1 million people relied on cash for most of their transactions over the past year. Furthermore, Ofcom reported that 1.5 million households lacked internet access as of March 2021, with 18% of these households comprising members aged 65 and above.
The poverty premium continues to exacerbate financial disparities. Fair By Design estimated that this premium costs a typical parliamentary constituency £4.5 million annually, which translates to over £430 per year for a low-income household.
Expert Insights
Richard Lane, Chief Client Officer at StepChange Debt Charity, emphasized the need for concrete actions to address financial insecurity. “We’ve seen promising commitments from the new government to address financial insecurity among households – but we’re yet to see firmed-up details of what this will involve. A long-term strategy that looks at the affordability of essential bills and financial resilience is necessary to really curb reliance on credit to make ends meet,” Lane said.
Tom Cuppello, Director of Risk at Broadstone, noted the cautious consumer behavior in the current economic climate. “It is a positive that we are seeing consumers exercise caution in their use of credit to finance spending. It also backs up recent ONS figures on the nation’s households’ finances which showed a reluctance to spend in the uncertain economic climate,” he stated.
Conclusion
The July 2024 statistics from The Money Charity paint a detailed picture of the financial state of UK households. With rising personal debt, increasing housing costs, and significant spending on essentials, the financial resilience of many remains under pressure. The data underscores the importance of comprehensive financial strategies and inclusive policies to support households, particularly those most vulnerable to economic fluctuations.
