Arrow Global have carried out research into consumer debt defaults as part of a major report which will be published in full later this year called Debt Britain: The Big Picture. It has forecast that consumer debt defaults will rise by 17% during the next five years, leaving 4.7 million households in arrears by 2020. The impact of interest rates rising faster than the government’s Office for Budget Responsibility prediction will mean that if the bank rate is even 0.5% higher over the whole forecast period, consumer defaults would increase by 24% by 2020, with 5 million households being in default.

The increase will follow a period where lower interest rates have meant that households are £1,300 better off per year and consumer debt has reduced during the past seven years from 145% in 2008 to 120% in 2015.

Arrow’s analysis of its management information reveals that the typical amount owed by its customers who have previously defaulted is relatively stable at around £2,500. This would suggest that while the volume of consumers in default may be set to increase over the next five years, the value of the default may not increase in the same way.