Personal borrowing hits record high with 35-year-olds taking the brunt

Aged 35? Your debt is about to catch up with you as a lifetime of record borrowing comes home to roost

It was all going so well: by the time this couple are in their mid 30s, they'll probably be struggling with unsecured debts worth £13,900 or more. (Getty)

The average Brit will owe £309,000 over their lifetime, including a staggering £111,000 in interest, according to the latest data analysis.

But that’s not because an extravagant few are abusing their credit cards, it’s because millions of us are taking part in standard financial rites of passage.

Buy a house at the average price, get a student loan, live with a credit card for a decade and take out personal loans for a new car and holiday abroad, and you too will be saddled with it.

Typical borrowing starts at only 23 years old as graduates, already facing £9,000 in fees alone a year.

By our late 20s we reach a borrowing peak, says MoneySuperMarket, as financial responsibilities start to kick in but Brits are an average of two years away from hitting the national average salary of £28,200.

However, with the average age of the first-time parent now coming in at 32, many people are hitting a salary high only to immediately have it snatched away, either by maternity leave or the £230,000 it now costs to raise a child to their 21st birthday.

All this means that by the time we hit 35, we’re facing a financial crunch point – the peak age at which we are most likely to be juggling the cost of young children, mortgages and loan repayments for cars, holidays, weddings and other big ticket life events.

Not that borrowing stops there. In our late 30s, with rocketing house prices and the introduction of new stamp duty tariffs, families are less likely to take on hew debt in a new home than they are to apply for a personal loan for home improvement, at least until aged 44, now the most common age for divorce.

The cost of splitting up? Around £70,000 – nine times higher than the average wedding loan.

With such a conveyor belt of debt milestones, the TUC recently warned that unsecured debt per household – an average of £13,200 in 2016, will exceed pre-financial crisis levels this year to reach a projected £13,900 and will reach an average of £15,000 before the end of the next parliament.

Reflecting what it calls the UK’s ongoing living standards crisis, the union says stagnated and now shrinking incomes are behind the increasing debt burden that is pushing the economy into “the danger zone”.

Warning lights

Wages are currently worth around £20 less per week than they were before the financial crash a decade ago it adds, and official figures from the ONS show that real wages are now falling again, the TUC warns.

But other key indicators are also fuelling growing concerns among economists and politicians, particularly recent figures that show County Court debt judgements against consumers have risen by 35 per cent in the first three months of 2017 compared with the same period last year.

With almost 300,000 County Court Judgement (CCJ) cases coming to court against consumers unable to pay their debts in the first quarter alone in England and Wales, it’s the highest figure for more than 10 years.

Growing numbers of debt and poverty charities, alongside the Bank of England, prominent MPs and others are now warning of dangerously high debt levels and families filling everyday funding holes with credit cards and other unsecured personal debt.

The next government, Frances O’Grady, General Secretary for the TUC, says, will inherit an economy that is heavily reliant on household spending to maintain growth, but in which debt per household is higher than before the financial crisis that was ultimately sparked by impossible debt levels.

“We’ve got this problem because wages haven’t recovered,” she says. “Credit cards and payday loans are helping to prop up household spending for now, but millions of families are running on empty.

“The next government must act urgently to deliver the higher wages Britain needs for sustainable growth. They must boost the minimum wage, and end pay restrictions for public servants like nurses, firefighters and midwives.

“A lot more government support is needed for the parts of Britain where well-paid jobs are in short supply. Communities that lack good jobs today could thrive tomorrow if they get proper investment in training, transport links, broadband and decent housing.”