Britons remain confident of being able to manage their debts despite collectively owing more than £1 trillion, according to research out today.

About 95% of people said they had enough money to pay their mortgage each month, with just 2% saying they regularly faced difficulties.

At the same time 74% of people said they had enough money to meet the repayments on their other borrowings, such as loans and credit cards, with only 11% saying they often had problems, according to Nationwide Building Society.

Nine out of 10 people said they expected their income either to stay the same or improve over the coming six months, and 42% of those questioned said they planned to reduce their borrowings, while just 13% thought they would increase them.

Nationwide said that, despite the fact that interest rates are expected to rise again on Thursday, the level of people experiencing problems keeping up with debt repayments was unlikely to rise dramatically.

It added that research carried out by City watchdog the Financial Services Authority had found that base rates would have to rise from their current level of 4.5% to 6.5% before the number of people who fell behind with at least one credit agreement would increase significantly.

One of the reasons for this is that employment remains high.

Around 71% of consumers said they felt positive about the number of jobs available, although this fell to 57% when people were asked about how the situation would be in six months' time.

Stuart Bernau, Nationwide's executive director, said: "Our research shows consumers remain confident about their ability to manage debt, but are also wary about taking on more unsecured debt in future. Underpinning this confidence is the current economic climate and employment situation.

"However, the warning voiced by (Bank of England Governor) Mervyn King and recent interest rate rises do seem to be causing consumers to think carefully about their borrowing and how they intend to repay debts in future.

"It seems clear that most people believe they are not over-extending themselves, that they are comfortable dealing with their finances, and that they believe their financial future, in the main, is steady and secure."

Last week the Bank of England said consumers now collectively owed £1.004 trillion through mortgages, loans, hire purchase agreements, credit and store cards.

Total debt is now around 2.75 times people's disposable income, compared with two times in the early 1990s.

However, Nationwide said initial mortgage repayments take up around 28% of people's take-home pay, down from 39% in the early 1990s.

Tuesday August 03, 2004