Young homeowners are finding themselves in increasing levels of debt, new figures show. In a study published by the National Centre for Social Research and the International Longevity Centre, the typical sum spent on a property by Britons aged 25 to 34 was 65,000 pounds in 1995 - however the value of homes bought by people in this age group had increased to 167,000 pounds by 2005. The study also stated that such consumers appear to be in a better financial situation now in comparison to the mid-90s due to their greater net wealth - with this being spurred by property prices growing above the rate of inflation. However, despite such statistics the study also pointed to an increased difficulty on the part of the young in handling their finances, as the average mortgage debt was revealed to have doubled over the space of the ten years.
Homeowners in this age bracket had a typical mortgage debt of about 50,000 pounds in 1995, yet ten years later this figure had risen to some 94,000 pounds. And in turn rising levels of mortgage debt could well affect their ability to service other areas of their finances such as utility bills and loans. Away from mortgages, young people were also shown to face rising levels of debt.
In 1995 the average household headed by a 25 to 34-year-old owed 2,400 pounds via secured loans, credit cards and other forms of borrowing. But for those in this age group in 2005 this figure increased to 4,600 pounds. In addition, such consumers could be set for a tougher financial future as rising property costs mean they are putting less money away for retirement. Just over a quarter (26 per cent) of respondents were making contributions into a pension scheme in 1995, however over the course of the following ten years this proportion had fallen to 13 per cent. Commenting on the findings, James Lloyd, co-author of the report, said: "The average 30-year-old now has more total wealth. This is mostly because property wealth and mortgages have doubled in size.
This is probably a result of people putting down larger deposits after getting help from parents. But the average mortgage debt of younger house owners has increased more proportionally than their household income." As a result, Mr Lloyd claimed that the government needs to continue developing new financial advisory services - which could help consumers adopt a more responsible attitude towards managing their money and repaying loans - and study how living in debt "affects the behaviour and choices of younger cohorts". As a result, those concerned about how they will be able to handle a rising number of debts may wish to opt for a debt consolidation loan so as to reduce their monthly outgoings into one low-rate payment. Earlier this year, Derek Oakley, insolvency director for Debt Free Direct, reported that access to loans and other forms of credit keeps many people "going" and helps them to do things that they would not be able to do otherwise.
He added that as most Britons are able to make regular loan repayments, placing restrictions on borrowing could harm the majority of consumers.
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