SURGING levels of debt in the Island have been revealed in an annual study – raising “red flags” about the financial struggles some households are facing.
Around 1,500 people took part in Statistics Jersey’s latest Opinions and Lifestyle Survey in June and July, answering questions across a range of topics including personal finance, health and employment.
Almost a quarter of households (23%) reported having borrowed more money or used more credit in comparison with last year.
The figure was higher among households with children than those without, standing at 39% and 18% respectively.
Those living in social rental accommodation were also more likely to have borrowed more.
Overall, one in seven households had used their overdraft to fund day-to-day purchases in the last year, while 15% of households were not paying off their credit card in full every month.
The survey was published amid a backdrop of price hikes and eye-watering living costs seen in the last 12 months.
Home owners have been hit hard after the Bank of England hiked interest rates 14 times in two years in a bid to stem rampant inflation.
Currently, someone with a 25-year, £400,000 mortgage – using a five-year fixed-rate at 5.69% – is paying around £2,500 a month, nearly £1,000 more than they could have been paying for a similar mortgage product last year.
And rents have risen by about 3% in the last 12 months, with many one-bed flats now being touted for around £1,300 a month.
Jersey’s inflation rate hit a 40-year high of 12.7% at the end of last year, although it has since been reducing slowly – with the most recently published figure standing at 10.1%.
However, Condor’s plans for a 18.76% freight cost hike next year could see the cost of goods rise at a faster rate.
The borrowing figures documented in Statistics Jersey’s report have been described as a “concerning trend” by Community Savings, which provides financial advice as well as loans and grants to those who are struggling to access funding from other sources.
Steve Eldred, the organisation’s managing director, said: “The fact that almost a quarter of households have borrowed more or used additional credit compared to the previous year raises red flags about the financial challenges many Islanders are facing.”
He continued: “The disproportionate impact on households with children and those in social rental accommodation underscores the urgent need for targeted support. Families with children often bear increased financial responsibilities, and those in social rental accommodation may face additional economic pressures.
“Our day-to-day experiences at Community Savings align with these findings, indicating that economic strain is manifesting across various demographics.”
He added that the shift in borrowing patterns could be attributed to the “escalating” cost of living, which was pushing individuals and families “past their previously manageable budgets”.
Mr Eldred said: “It’s crucial to recognise the evolving economic landscape and adapt accordingly. For those finding themselves navigating greater debt, we advise a proactive approach. Seeking financial counselling, exploring budgeting strategies and considering debt consolidation options are steps individuals can take to regain control.
“As we navigate these uncertain times, it’s essential for individuals to engage in open conversations about their financial well-being and seek assistance when needed.”
