KPMG warns of record personal insolvencies
KPMG has predicted a record 120,000 personal insolvencies this year.
The company issued the warning as latest figures from the Insolvency Service revealed personal insolvencies dipped 8% this quarter but increased by 28% on the previous year.
The figures show that interest rate rises and the end of cheap fixed-rate deals could force more individuals over the edge.
They also reveal that 113,439 people went into bankruptcy or entered into an Individual Voluntary Arrangement in the 12 months ending June 30 this year, an increase of 28% over the previous 12 months.
Bankruptcies bucked their recent trend, with a modest fall to 16,258 people entering bankruptcy in the quarter.
Steve Treharne, head of personal insolvency at KPMG, says: “Despite this fall in bankruptcy numbers, we can’t take comfort in these figures.
"The five increases in interest rates in the last year, and a further rise on the cards, means that the pressure on the over-indebted continues to increase.
“Those who have managed to keep their head above water as a result of cheap fixed-term mortgage deals could also soon be struggling.”
Treharne adds: “According to the Council of Mortgage Lenders there are around two million borrowers currently enjoying cheap fixed-rate mortgage deals due to end in the next 18 months, who may effectively have to come to terms with six interest rate rises at the same time.”
County Court judgements are rising and home repossessions are consistently high, according to the figures.
Treharne says: “These figures are a clear indication that more people are struggling to manage their financial affairs. At the same time, rising borrowing costs and household bill inflation will leave less money to repay unsecured debts.”
Source: mortgagestrategy.co.uk
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