Brits ‘could be storing up problems with longer mortgages and higher credit card use’

The Bank of England’s Financial Policy Committee (FPC) has warned that current borrowing trends could lead to people facing debt troubles in the future.

Although owner-occupier mortgage arrears are relatively low, a report from the committee revealed a notable increase in the number of people opting for mortgages of 35 years and above. It also found a small rise in those moving to interest-only deals.

Although this could help homeowners deal with the cost-of-living crisis in the short term, it could be they’re just kicking the problem down the road.

More misery for renters

Rising interest rates have also seen mortgage costs increase for landlords. The FPC predicts this will cause some to sell up pushing down house prices.

But others, it suggests, will look to pass on rising costs to tenants, piling more misery on struggling renters.

Credit card use on the up

The FPC also pointed to evidence of higher credit card use. It warned this could lead to debt problems for some in the near future, especially if unemployment starts to rise in the face of the struggling economy.

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