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Families borrowing average £1,500 from friends



friends borrowingMore cash-strapped families are turning to their friends and family for financial help instead of taking out loans from banks.

According to Aviva's family finances report, the amounts lent in informal loans have more than doubled in the last three months, as households continue to feel the squeeze.

The typical size of such loans reached £1,545 in August, compared with £701 in May, the highest figure the study has recorded since the reports began in January last year.

Rising debt levels

Family debt levels crept up from £9,314 on average in May to £10,563, excluding mortgages but including debts such as personal loans, overdrafts and credit cards, claimed the report.

As such, many people are turning to their loved ones to avoid taking on more formal borrowing and the charges that come with the repayment plans.

Meanwhile, the report revealed that family incomes have also fallen, dropping from £2,150 in May to £2,003 by August.

This has had a serious impact on disposable income, with large numbers of us having next to nothing left over at the end of the month.

The figures also represent a drop in the proportion of 'well-off' families. The share of families with an income of more than £2,500 a month fell from 36% to 31% year-on-year.

A lack of job availability and low wages across the UK has contributed to this, while the report suggests some parents are taking unpaid leave or cutting down on hours to care for children during school holidays.

Savings

With many of us now paying off greater amounts of debt, the amount of savings we have put away has also contracted. The typical family's savings fell to £1,131, from £1,228 in May, but they remain higher than the same period last year when average savings stood at £982.

"As every parent knows, school holidays can be a financial challenge, particularly for workers who don't receive paid leave," said Louise Colley, head of protection sales and marketing for Aviva.

"However, it seems that families are trying to cut their cloth accordingly and the fact that some have dipped into savings this quarter suggests they may have been planning ahead."





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