GUERNSEY’S consumer debt could be £1bn. Local lenders were unsurprised at Bank of England figures released yesterday that estimated debt in the UK at nearly £17,000 for every man, woman and child.

Some believe that this figure could be even higher in Guernsey, with a strong level of home ownership at high prices.

But there were only a few fears that rising interest rates would see an increase in the number of people being unable to manage their debt.

The Citizens Advice Bureau said that people coming to it with debt problems were at a much higher level than years ago.

‘The statistics bear out that the majority of borrowing is on mortgages and is equity-based,’ said David Cherry, of Cherry Godfrey Finance.

‘People have seen a huge rise in their property values and so have felt richer and have utilised that equity. But I think as interest rates move up, people will naturally tighten their belts a bit.

‘I don’t think there is any real concern that the bubble will burst and people are generally quite sensible about spending and how much they borrow.’

He said that he envisaged consumer spending would continue to grow but that there wouldn’t be any major surge which could lead to problems.

‘We have seen a major increase in the use of credit cards over the last decade, but the majority of the amount outstanding is paid off after a month. It is just using a different payment method.

‘The statistics depend on when the snapshot is taken, so I don’t think debt is growing at the rate first anticipated.’

Goldridge Stone director Pierre Blampied said that it was a concern that lending was not regulated in the island and that there were a large number of companies which would lend to anyone.

‘In terms of mortgage lending, people don’t tend to overstretch themselves – we don’t get many repossessions of properties here, but people definitely overcommit in terms of credit cards, unsecured personal loans and high-yielding debt. That is a big concern locally.

‘We are seeing a lot of younger people, who are maybe not as financially astute, and they can build up huge debts, which has an impact on what they can borrow as a mortgage.’

The bureau deals with an average £1.5m. of new debt each year. Of the people it has been able to help, 60% of that debt is through loans and credit cards, with the amount increasing over previous years.

‘I’m not sure there has been an increase in the number of people we have helped with debt problems in the 10 years I have been here, but it used to be an exception if people came to us with £5,000 of debt,’ said bureau manager Kate Raleigh.

‘Now the average is £18,000 before they come to see us, excluding a mortgage. It is much more to do with personal debt and loans rather than to do with businesses. There is more of a culture of borrowing now.’

She said that it was ideal if people came to the bureau as soon as they realised they had a problem.

Statistics showed that a difference in 10% of income can determine whether a person can cope easily or get into considerable debt.

‘And once they get into debt, they get in deeper because of interest,’ she said.

According to the Bank of England, 80% of UK personal debt is in the form of loans secured against dwellings and there were concerns that further interest rate hikes could force heavily indebted consumers to go to the wall.