This has led to a 7% increase in fears surrounding rising mortgage rates, with more than a quarter of the population listing this as one of their top three financial concerns.
The average family home is now worth £244,100 – the largest figure ever recorded by the Family Finances Report series. In December 2013 the average home was worth £222,280 so this means an increase in property wealth of £21,720 in a year, or nearly 10%. This is good news for those who bought when prices were lower, but a challenge for those trying to get on the property ladder.
The number of families in privately-rented accommodation has also leapt, from 16% to 24%.
While family income has risen to £2,012 a month on average, up 4% in six months, families have seen a 3% increase in expenditure and are taking on more debt, while the spectre of interest rate rises, which would increase mortgage costs, is troubling more families.
Families are juggling household debt, which has soared, and now typically stands at £16,300 per household against £7,840 six months ago – reversing the sharp drop seen between July and December last year.
Families owe more on personal loans up from £1,210 to £2,090, while the amount owed to payday lenders has more than tripled from £350 to £1,290.
The study shows that more families are saving regularly, with the proportion who save nothing each month at a record low of 24% - a step forward from the 39% who weren’t saving three years ago. However, the average monthly amount put away has dipped slightly - an average of £84 compared with £85 a month six months ago - and savings cushions have declined to £1,770 against £2,274 six months ago.
Louise Colley, protection director, at Aviva, said:
“Our biannual Family Finances Report reveals that some families are feeling the dual pressures of debt and high housing costs, but hopefully some of these demands could be eased by rising incomes.
“It’s also encouraging to see more families are getting the message that it is important to protect your finances against sudden shocks – building up a savings cushion and taking out insurance. The Family Finances series has shown UK families to be a resilient and resourceful bunch, as finances have fluctuated over the years, so now it’s great to see that people are taking actions to make sure they’re prepared for whatever life has in store.”
