Household disposable incomes tumble by £100pm
The Bank of England’s quarterly report covering the autumn of 2009 shows householders’ disposable incomes after tax, housing costs, loan payments and utility bills having fallen by an average £100 per month over the past year.
Manual workers, many of whom have been hit by reduced working hours, saw their disposable incomes depleted by between £50 and £100 a month, while non-manual workers lost out by an average £28.
The unemployed suffered the biggest shortfall with monthly disposable incomes down by a typical £71.
In addition, plummeting property values have increased the proportion of homeowners in negative equity to 5%, up from 1% in 2007.
However, lower interest rates have meant just over a half of mortgage borrowers have seen the cost of their repayments fall during 2009.
Fifteen per cent of this group have benefiting by over £200 a month and the survey also indicates that a quarter of Britons are saving more than a year ago.
The report states:
“The severe recession of the past year might be expected to have put the financial position of British households under considerable strain.
Unemployment has risen significantly, credit conditions have tightened and many homeowners have seen their housing equity eroded but many borrowers have also benefited significantly from the effects of lower mortgage interest rates.”