Borrowers who believe rising house prices or insolvency will solve their debt problems risk "financial suicide", a report has warned.
The Personal Finance Research Centre found young adults relied increasingly on borrowing for day-to-day spending.

The report said parents also felt pressured to borrow to provide for their children.

But it warned against a mistaken belief that rising house prices or insolvency provided an easy route out of debt.

'Disconnect'

According to the research, increased expectations about living standards, coupled with the ready availability and relative cheapness of credit, mean many borrowers have little desire to seek an alternative.

The report said using credit to meet everyday expenditure was a way of life for many young adults, with the difference between needing something and merely wanting it often "virtually indistinguishable".

The research also highlighted what it called a "disconnect" between the perceptions and reality of potential debt solutions.

A core minority of young adults see debt consolidation and insolvency as offering easy routes out of problem debt.

And all age groups see property as the ultimate solution to future financial needs.

'Seismic' change

The chief executive of Standard Life Bank, which commissioned the research, said consumer attitudes to debt had changed "dramatically" in recent years.

"Credit is not only freely available but considered a way of financing lifestyles rather than reflecting need," Anne Gunther said.

"A seismic change in mindset is required to begin to unwind the chronic debt issues we face in the UK.

"Pinning your hopes on housing equity or thinking that insolvency is the easy way out of debt is financial suicide," she added.

Standard Life is calling for current initiatives on financial education and capability to be reinforced and strengthened.

The Consumer Credit Counselling Service (CCCS), a debt advice charity, pointed out that although the amount of consumer debt has risen in recent years, only about 7% of borrowers get into financial difficulty.

It also wants a more coordinated approach from government, regulators and individual providers.

"Borrowing is a sensible way for 93% of people to mange their financial lives," said CCCS chairman Malcolm Hurlston.

However he stressed the importance of seeking professional help as soon as debt problems arise.

And he agreed the assumption that an increase in property prices would act as a "get out of jail card" was worrying.

In fact, he argued that owning a home could leave some borrowers at greater risk of debt.

"It's time to put an end to the old shibboleth that buying a house is always good for you," he said.

"A large proportion of the people who turn to us for help are those who have taken out mortgages which they cannot afford, leaving them highly vulnerable to interest rate volatility," he added.

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