An Increasing Number Of People In One Midlands County Are Struggling With Their Finances, New Figures Show

Category: Finance, Credit.

An increasing number of people in one Midlands county are struggling with their finances, new figures show.

The statistics reveal that the amount of debt within Leicester, which could include money owed on mortgages, has doubled over, loans and overdrafts the past 12 months to stand at 20 million pounds. Overall, findings from Citizens Advice indicate that it is helping people in Leicestershire get to grips with debts totalling some 50 million pounds. Meanwhile, the number of people in the red has tripled to 3, 10Outside of the city, the county s Citizens Advice branches are now managing debts of 30 million pounds, the Leicester Mercury reports. In addition, it was stated that three years ago borrowers could get a four- year fixed- rate deal charging interest of 2 per cent. The increase in financial difficulties was mainly attributed to homeowners coming towards the end of their fixed- rate mortgage deals, Citizens Advice suggested, which, could be adding up to 300 pounds on consumers monthly bills. However, now rates for new deals are revealed to be closer to the six per cent mark, a figure which could place more pressure on their spending. This could see them struggle to pay back personal loans and credit cards, as well as affording groceries and transport costs.

And in seeing an increase in mortgage payments, it is possible that a significant number of people may also encounter problems in meeting other demands on their finances. A spokesperson for the county branch of Citizens Advice told the publication: "There are some scary figures coming out. It s almost as if you lost your job and were off work for two weeks, you would be in serious trouble. Everyone s finances are so fragile, they re teetering on the edge. It s happening to everybody, but it tends to be the middle- classes, because they have the jobs, the loans and, the credit cards the cars. " Alan Duncan, shadow business secretary and MP for Rutland and Melton, said: "People need to realise[ the] full cost of their borrowings at the start- and that goes for mortgages, store cards and especially credit cards. " He also warned against those mortgage products" which give you a cheap start and then thump you later" . And although the Bank of England s monetary policy committee lowered the base rate of interest to 5 per cent last month, it was suggested that one in five banks are yet to pass on this reduction to consumers.

Michael Morton, case work manager for Leicester Money Advice, also pointed out that property prices have increased dramatically over the past ten years. "But with the rise in interest rates, people can suddenly find they are paying a lot more than they can cope with, " he added. For people struggling with the prospect of higher mortgage repayments, taking out a loan for the purposes of debt consolidation might be of use to homeowners. Such a loan might be especially helpful for people in Swansea, after the South Wales Evening Post reported that the number of debt cases dealt with by financial advisory services and solicitors in the city increased by 34 per cent in the 12 months leading up to June 2007 to stand at 53 Doing so could allow consumers to negate increased constraints on their spending as the loan allows them to pay off various demands at once, leaving them with one low- cost payment to make each month.

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