Survey reveals borrowing increase
More adults are taking out loans to fund their lifestyles with many left struggling to meet debt repayments, a survey revealed today.
The amount of people taking out personal loans with financial institutions, and hikes in the average amount borrowed, resulted in a 30% increase in personal borrowing last year.
The survey from the Economic and Social Research Institute (ESRI) and IIB Bank found around a third of Irish adults are regularly in debt due to personal non-mortgage loans.
The study found borrowers with an income of €25,000 or less and those in the 40 to 49-year-old age group were under greater strain to meet their debt burdens.
“This implies that if interest rates go up over the next few years then these adults or their families are going to run into severe problems in terms of the amount of debt they have,” Austin Hughes, chief economist of IIB Bank, said.
“The survey suggests that most of them are borrowing to do with lifestyle loans basically that they have had significant increases in their outgoings over the last while and their incomes haven’t been rising that quickly.
“So you will find the real problems have been in terms of general household costs and childcare. People have been squeezed particularly people on relatively modest incomes.”
Around 36% of the population are regularly in debt, while the average amount of debt has increased by 14% over the past year to €5,800.
Over 15% of borrowers feel their debt burden has increased with many citing problems with changes in incomes, childcare costs and other household costs.
“Now with low inflation people’s salaries aren’t rising that quickly and the burden of debt is remaining with them larger for longer so that is a real problem,” Mr Hughes said.
The rise in property values has encouraged around one in five people to increase their borrowing with many spending money on extensions and home repairs.
At the end of 2004, the total amount of money taken out in personal credit stood at €85bn – up from €68.5bn for the previous year.
