Debts mount for young homeowners
Updated on 20 August 2007
Young homeowners whose debts have become unmanageable owe more than £20,000 in unsecured debt, nearly twice as much as those who are still renting.
Debt charity the Consumer Credit Counselling Service (CCCS) said the average person aged under 24 who was on one of its debt management plans owed £16,351 during the second quarter of the year.
But it said young people who owned their own home had borrowed an average of £20,290 through credit cards, loans and overdraft, compared with £12,113 among those who were still renting.
Young homeowners also had more lines of credit than tenants at an average of 7.64, compared with 5.95 for renters.
The group said it was likely that the increasing cost of homeownership, including rising interest rates, was responsible for the high levels of debt young property owners found themselves in.
CCCS chairman Malcolm Hurlston said: "There is a danger in young people getting on to the housing ladder before they are ready financially.
"Before taking out a mortgage, the under 25s should make sure they can still afford to live and not rely on credit to plug any gaps. That way lies financial disaster."
It warned that with interest rates rising to their highest level since 2001, homeowners were likely to be further squeezed this year, particularly those who had overstretched themselves.
The group found that personal loans accounted for more than half of unsecured debt among young people, while credit cards accounted for 28%.
It said young people tended to use more expensive forms of credit than other age groups, such as overdrafts, catalogues and store cards, as they built up their credit profiles.
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