The areas where consumers borrow the most

Posted by Ben Tumilty in Neighbourhood on 14 October 2014 - Ben is a Credit Analyst at checkmyfile

Peterborough holds the highest debt per person in the country, a new survey reveals.

Figures released jointly by the Council of Mortgage Lenders (CML) and the British Bankers Association (BBA) reveal that the Peterborough postcode of PE7 0 has the highest level of personal loan debt per person.

The data has been analysed and released by the two organisations in order to show just how varied borrowing is by people and businesses, depending on the area of the country. Those in the PE7 0 postcode sector have an average debt level of £1,978 per person – over £300 more than the next highest, NE13 9 in Newcastle, with £1,648. The third highest average can be found in Finsbury and Islington, in the EC1V 2 postcode.

The CML and BBA advise that the data has not been provided by all lenders, but that the lenders participating in the survey cover about 75% of the mortgage market and 60% of personal loans. As such, although the debt is not an accurate indication of borrowers’ financial health, it does give a rough idea of lending and borrowing habits in each area.

The information also reflects the outstanding mortgage debt at each postcode and in each region. The highest amount of mortgage debt can be found at the postcode SW18 3, in South West London – the total mortgage debt here stands at £667 million. This contrasts massively with the lowest, found at IV48 8 – this covers the Isle of Skye, and is down as low as £622,111. The total mortgage debt in South West London understandably reflects the fact that house prices in this area are a great deal more expensive than the average mortgage.

Richard Woolhouse of the BBA suggests that it is difficult to take any hard and fast conclusions from the information, and that the information has been provided mainly to increase transparency for all concerned. He says, “When we look up and down the country, we can see a good spread of lending. That's important for individuals, businesses and the wider economy”.

The main criticism of the survey is likely to be that the figures released are not in any real context. The issue is that an average debt of £1,300 per person in an extremely affluent area may be comparatively much less of an issue than an average debt of £450 in a poorer area.

In order to get a better idea of manageable debt in each area, a comparison would need to be made with the average salary, as this would better reflect how easily the outstanding debt can be repaid.

All the same, the information provided by the BBA and CML provides an insight into area-specific lending and borrowing habits, and gives a basic idea of the amount of debt customers are taking on. The hope is that these customers can continue to manage these debts, as a generalised failure to do so could lead to more financial difficulties across the board.

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