While much of financial news in the UK has been dominated by the massive rise in the property market,  there appears to be a different picture developing behind the scenes, a picture that has the potential to get out of control.  The facts are that :-

· The ratio of savings to income is at a 50 year low.
· Mortgages are being approved in excess of five times income.

· Independent Voluntary Arrangements (i.e. debt repayment plans) are at an all time high.

· Bankruptcies are nearing an all time high.

· Base rates are edging yet higher and higher. 

Many observers have tried to call the top of the property market for the last 2 years, but the sector keeps going from strength to strength.  Even though demand for property has softened in some areas of the country, prices have not really fallen too far back.  It seems inevitable that as base rates creep higher and higher, reality will hit home at some point and the property market has the potential to stall at any moment.

Over the last few years we have also seen a substantial increase in the average person’s tax burden and cost of living, all at a time when wages are continually decreasing in relative terms.  It is inevitable that the crunch time is approaching, and while some people will be bailed out by the massive increase in the value of their property assets, those who hold onto their property and miss the top of the market have the potential to end up in serious financial trouble - not to mention those in rented accommodation, who do not have property assets to fall back on.

While the economy is still fairly robust at the moment, as base rates creep higher and higher this will put pressure on businesses, which will impact upon employment figures, retail spending, etc, etc.  All of the pieces are slowly falling into place for a cooling down, and realignment of the economy, but there will be some financial pain for many, before we see a return to a more balanced economic environment.