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Household debt repayments higher than in 1991

A record number of families are now having to allocate more than one fifth of their monthly salaries to debt repayments according to the Bank of England.

A report commissioned by the bank, shows the number of households now paying more than 20% of their salaries on mortgages and other debts is higher now than it was in 1991, when the last recession kicked in.

The revelation comes in the Bank’s Quarterly Bulletin, which also shows that families are struggling to make repayments, with the proportion of people finding it hard to maintain payments at its highest level for more than 15 years.

The report said “A slightly higher proportion of mortgagors in the 2007 survey devoted a relatively large share (more than 20%) of their pre-tax incomes to debt service than was the case in 1991 when nominal interest rates were over 10%.”

High street retail spend has been hit hard by a crisis in consumer confidence fuelled by higher levels of consumer debt in recent months.

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