Personal Debt Reaches New High

1.53.56pm BST (GMT +0100) Thu 3rd Apr 2008

• Lib Dems call for action to prevent mass repossessions -

Stockport homes are increasingly at risk of being repossessed as personal debts soar, according to local Lib Dem MP, Andrew Stunell.

"Local families are struggling to meet repayments on their homes, as nearly a fifth of our income is now spent on servicing debts," the Hazel Grove MP said.

Speaking in Parliament this week, Mr Stunell pointed out that very few families have any safety net if they cannot meet their mortgage repayments.

"At a time when repossessions have reached over 750 a year in Stockport, many of my constituents have found that their mortgage protection policies do not work at the exact moment they need them to, with many policies expensive and full of exemptions.

"The UK economy is facing the bleakest outlook since the Tory recession of the early 1990s. The Government needs to work with banks to find alternatives to repossession and protect those at risk from losing their homes."

ENDS

Notes to editors:

1. Debt:

Personal debt now stands a £1.4trillion, approximately £56,000 for every household

The household savings ratio is at an all time low of 2.1% down from 10% when Labour came to power

18% of household income is now taken up servicing debts, higher even then at the start of the 1990 recession when it was 17%

2. Housing:

Real house prices have more than doubled since the peak of the last housing boom in 1989

House prices are now more than 9 times average earnings compared to 5 times at the start of the last housing crash in 1990

There were over 95,000 repossession orders last year, the highest number since 1993 and virtually the same as at the start of the last housing crash in 1990

House prices in the first three months of the downturn (November 07 to Jan 08) fell by almost 3% compared to a 2% fall at the start of the last housing downturn at the end of 1989. Morgan Stanley predict up to 20% house price fall over the next two years

House prices have now been falling for four consecutive months

Despite a 0.5% interest rate cut by the Bank of England since December, most mortgage lenders have increased their rates as the cost of inter-bank lending remains high

3. Inflation:

Inflation remains at 2.5%, 0.5% above even the Government's own target and is predicted to rise to over 3% this year

Oil prices continue to be around $100 per barrel

Food prices have increased much more dramatically with the cost of bread having increased by 28% and butter by 37% since Gordon Brown moved into Downing Street

4. Details of the Liberal Democrat Opposition Day Debate on Repossessions and the Housing Market can be found at: http://www.publications.parliament.uk/pa/cm200708/cmhansrd/cm080402/debtext/80402-0006.htm#08040252000001