Insolvencies among millenials soar as housing costs shred ‘cash cushions’
The number of insolvencies among millenials has climbed rapidly in the past three years, as rising housing prices leave younger people without a “cash cushion” to fall back on.
House price inflation is partially driving the trend, which has seen the number of insolvencies among under 35s rise by nearly a fifth during the past year, according to professional services firm Moore Stephens.
Meanwhile, the number of insolvencies – which can often lead to bankruptcy – among over 55s has dropped, falling by 9 per cent among the baby-boomer category of over 65s.
“The rates that millennials are going insolvent is very worrying, and the problem is worsening,” said Jeremy Willmont, head of restructuring and insolvency at Moore Stephens. “Millennials have more than twice as much of a chance of insolvency than baby boomers; this is a major cause for concern.”
Last year, 4.3 in 10,000 over 65s and 9.6 in 10,000 under 25s went insolvent, the firm found, adding that millennials often have “little left to act as a cash cushion” if they suddenly lose an income stream.
Moore Stephens pointed to older people spending proportionately less on housing, and said many can rely on a partner for emergency money in the event of a job loss of illness. Recent figures from the Office for National statistics showed that 4 per cent of the UK’s net property wealth was held by under 25s, with over 65s holding 41 per cent.
“In addition to high rents and mortgage repayment costs, millennials can often find it difficult to save significant amounts,” said Willmont. “Millennials are at risk of falling into debt through using credit cards and loans to cover living costs such as buying and maintaining a car, which can easily be set up without taking financial advice.”