Debt default forecast personal insolvenciesAugust 22nd 2018
- Latest Arrow Global forecast reveals consumer debt levels set to rise
- Personal insolvencies have been rising since 2015
- Rising interest rates to fuel acceleration
- Findings are part of Arrow Global’s ‘Debt Britain 2018’ research
Personal insolvencies are on track to hit 105,000 per annum by 2022, breaking highs last seen six years ago, according to the latest econometric forecast from Arrow Global’s ‘Debt Britain 2018’ research.
Analysis shows that personal insolvencies have been on the increase since 2015 and rising interest rates on the back of the Bank of England base rate rise is fuelling the acceleration says Arrow Global. This is despite a slight dip in 2019 due to the lagged effect of the post-Brexit referendum bank base rate cut and subdued unemployment rate.
From analysis of the Office for Budget Responsibility projections for interest rates, unemployment and consumer debt, Arrow Global also identified that the performance of insolvencies has been worse than that of debt defaults and repossessions in recent years. This development could be to the result of an increased willingness of people to address excessive debt through a formal arrangement with creditors.
Lee Rochford, Group chief executive officer of Arrow Global comments:
“A worrying trend has been identified in our analysis with 105,000 people a year forecast to become personally insolvent by 2022.
“Insolvency is a devastating situation for anyone to experience. As an industry we are leading the way so that consumers understand how to manage their finances without taking on more debt than they can afford to repay. As a responsible credit management services provider we focus on helping people manage and repay their debt in a sustainable way, and our partnerships with Citizens Advice, Christians Against Poverty, StepChange and Payplan all play a crucial part in educating our customers about debt.”
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About Arrow Global
Established in 2005, Arrow Global specialises in the purchase, collection and servicing of non-performing and non-core assets. We identify, acquire and manage secured and unsecured loan and real estate portfolios from financial institutions, such as banks and credit card companies, as well as retail chains, student loans, motor credit, telecommunication firms and utility companies.
We play an active role in helping financial institutions reduce their balance sheets and recapitalise in order to increase mainstream lending. By purchasing and managing non-performing loans and other non-core assets, we provide valuable capital and expertise to a growing European market.
We are a regulated business in all of our European markets, managing over £47.4 billion AUM across six geographies with over 1,700 employees and approximately 10 million customer accounts.
In 2017, we helped over 750,000 customers to start clearing their debts in a manageable and timely manner.
Notes to editors
Debt Britain: The Big Picture? The Arrow Global Guide to Consumer Debt, was first published in 2016 and included for the first time forecasts for debt defaults, mortgage possessions and personal insolvencies in the UK. These forecasts were updated in Autumn 2016 and following the latest forecast update from the Office for Budget Responsibility (OBR) published alongside the budget on 22 November 2017, has again been refreshed with projections for defaults, mortgage possessions and personal insolvencies for 2018 onwards.
The Arrow Global forecast for consumer debt defaults is based on an econometric model which uses two explanatory variables: bank rate and unemployment. The model measures the past relationship between these explanatory variables and the dependent variable (mortgage defaults) using data going back to 1982.
The report was authored for Arrow Global by Rob Thomas, Director of Research at Instinctif Partners and formerly a Bank of England economist, high profile analyst at the investment bank UBS and senior policy adviser to the Council of Mortgage Lenders (CML). Rob was also the project originator and manager at the European Mortgage Finance Agency project and created the blueprint for the Government’s NewBuy mortgage scheme.