An article in relation to the changing times in the economy and how the recession has and will cause a lot of affect for the younger generation – due to facing high debts and low assets. The bank of mum and dad is more used as many younger generations are finding it hard to get on the property ladder or once on it – they are finding it very difficult to sustain. There are some very good facts and figures.
- Many younger Britons face a future of high debt and a struggle to get on the property ladder
- Younger Britons are getting into more debt earlier in life and will be unlikely to be able to acquire assets in the same way their parents and grandparents did
- More than a million (1,039,000) households in the 18-39 age group are identified as already struggling to cope.
- A further 893,000 households in that age group are ‘at risk’ of falling into difficulty.
Higher debts among younger consumers
- Almost three quarters of those aged 18 to 39 now have unsecured debts, compared to around 60% of the 40-54 age groups
- Younger households are more likely to use credit to make ends meet, with 19% of the 18 to 24 age group saying they are very or fairly likely to need to borrow in the next three months.
- Younger households are also more likely to be behind with their debts, with those in the 25 to 39 age group more than twice as likely to be in arrears or insolvency as those in the 55+ group (15% compared with 7%).
- average house price grew from around 2.3 times to nearly 5.5 times gross earnings, leaving younger homebuyers with extra mortgage debt as a result of a significant transfer of wealth to those further up the housing ladder.
- Rising prices and squeezed incomes mean that the ‘bank of mum and dad’ has become the only option for an increasing number of first time buyers, with the proportion under the age of 30 requiring financial assistance rising from 38% in 2005 to 84% in 2010.
- Total student debt is expected to grow to £153 billion in real terms by 2031, with loan repayments amounting to nearly £7 billion a year.