The Impact of Debt on the Housing Market in the United Kingdom

In order to address this issue, this paper will first identify what the level of personal debt is for the nation and then make predictions as to what direction the level of personal debt will be going in the near and long term future in the UK. This will be followed by a discussion as to what consequences of having personal debt are for the people in the UK. This section will conclude with a discussion as to what is the impact of personal debt on the housing market.According to (2009), the level of personal debt in the UK stood at approximately £1,458bn (October statistics). Building on this point, in an article by Pym (2009) it is the case that personal borrowing actually declined over £600 million over previous months and as of present personal debt in the UK now rests at approximately £1.457 trillionAccording to the CIA World Factbook (2009), the UK falls 50th on a list of 126 on a ranked scale of nations representing what percentage of total GDP is a public debt which is debt owed by the government to holders of government debt instruments, estimated in 2007 to be approximately 43.60%.Keeping in mind that it is the fact that in recent months people have been paying off a significant portion of their personal debt one must also question why it is that this action is transpiring. One logical conclusion is that with falling interest rates the price of loan repayments such as mortgage payments would likely be falling. It could be the case that people would opt to repay their loans faster rather than spending it. According to the Telegraph (2009), UK homeowners have been paying down their mortgages for six straight fiscal quarters which as was argued by the article is largely owing to changing consumer preferences in the wake of falling house prices. It is often the case that when house prices are increasing people are more willing to increase the size of their mortgage and the opposite holds true when the price of a mortgage is falling.