The Bank of England witnessed a new height in mortgage debt which crosses £1 trillion barrier the month of May. This rise is expected to have a lasting effect on the interest rates of real estates which may further worsen the financial conditions of many Britons.

London (seek.uk) July 3, 2006: With the mortgage debt hitting the £1,006,796m in May, the Bank of England announced the biggest gain in the last two and a half year. The Bank also signaled at the increasing number of people in extreme debt which would soon hit half a million.

The rise in the number of mortgage approvals which returned back to 117,000 from 106,000 in April, the Bank’s governor, Mervyn King confirmed that the scale of debt was not a worry, but he also showed his concern over the annual increase in the number of insolvencies which according to him was quite high and could reach one in 100 of the adult population.

The Consumer Credit Counseling Service has also indicated the increasing cases of extreme debts. The statistics show that the proportion of clients owing more than £100,000 to creditors has increased last year to 2.7 per cent from 1.4 percent in 2004.

The Liberal Democrat Treasury spokesman, Vince Cable blamed the government for the extreme financial difficulty of growing minority. George Osborne, his Conservative counterpart was also concerned over the figures and the vulnerable families who were at the risk from the impact of higher interest rates. Latest figures of June showed a sharp rise in consumer credit.

The City Economist forecasted the further rises in the house prices. John Butler, at HSBC, commented that activity in the housing prices should support house prices at least in the near term. Others pointed a modest 0.3 per cent in June. Ed Stanfield, the property economist at Capital Economics commented that the 1 per cent rise over the three months to June was half the rate of the first quarter.

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