BoE reports sharp drop in those concerned over debt

BBC News

There's been a sharp drop in the number of households concerned about their debts, according to a survey done for the Bank of England.

The report says that in 2013, 39% of households were worried about debt, compared with 46% last year.

However the Bank warned about the impact of future rises in interest rates on borrowers.

The number of people worried about the affordability of their debts was unchanged from 2012.

"While debt servicing costs were also broadly unchanged, a significant increase in interest rates at current incomes may increase financial pressure on households with a mortgage," the report said.

Among households with mortgages, 8% are paying out 35% or more of their incomes on servicing those loans.

But if interest rates were to rise 2.5%, the proportion of people supporting that repayment burden would double to 16% - assuming no rise in incomes.

The survey showed that the average outstanding mortgage was reported to be around £87,000 and average pre-tax monthly income was £2,701, up slightly from £2,631 a year ago.