Insolvency rates among young men are rising three times faster than amongst young women, having increased by 75% amongst men under 25 in 2016 alone*.
2,020 men under the age of 25 became insolvent last year, a dramatic rise on the 1,154 in 2015. This is compared to a much smaller 24% rise in insolvencies amongst women in the same age bracket (to 2,689 in 2016 from 2,164 in 2015).
The rising number of male insolvencies isn’t limited to just the youngest bracket. There has also been a 32% rise in men aged between 25 and 34 becoming insolvent – the figure rose to 10,331 in 2016, up from 7,846 the previous year.
The sharp rise in expensive car finance is likely to be one of the main drivers behind the rise in insolvencies among young men. Data from the Finance and Leasing Association shows that £14.2bn in second hand car finance was taken out by UK consumers in the year to May 2017, up 10% on the previous year.
Bank of England agents recently raised concerns over the promotion of car finance, and blamed the use of ‘personal contract purchase agreements’ to buy cars as key reason for why the UK’s consumer credit grew by 10% in the last year.
Jeremy Willmont, Head of Restructuring and Insolvency, says: “Such a huge jump in young men becoming insolvent poses real questions about how they have managed to get their finances in this state in such a short period of time.
“Whilst base rates are currently unusually low, the rates you pay on credit card debt and other unsecured debt can be punitive. It may be that overspending and under-saving in the past few years for the younger generations is coming back to bite them.
“Whilst men spending money on cars is not new, it could be that soaring use of car finance products has hit young men harder. Whilst mortgage debt might be the biggest overall outgoing for individuals, it is the soaring levels of other consumer debt that now has the Bank of England concerned. This jump in insolvencies amongst young people - especially young men - suggests they are right to be worried.”
The number of men under the age of 25 to go insolvent last year increased by 75% – more than triple the rate of increase for young women.
*Source: Insolvency Service