1m payday loans in 2012 to cover mortgage or rent

Almost one million people took out a payday loan over the past 12 months in order to pay rent or mortgage payments.

According to charity Shelter, just over 2% of participants in a survey said they had resorted to a high-interest payday loan to ensure they did not fall behind on the mortgage or rent.

This amounts to 979,000 people, clearly indicating the troubling state of household finances across the UK.

Credit was a popular way to fund these payments in 2012, with a further 7% saying they used an unauthorised overdraft to help them cover the costs. One in ten is forced to do so on a monthly basis.

Strict lending criteria and a 20% deposit have trapped tenants in the rental sector, where prices are spiralling steadily upwards.

Homeowners have not fared much better: following a decision by lenders to raise their standard variable rates, over a million homeowners witnessed increases in their mortgage costs.

As a result, around 7.8 million Brits are having difficulties keeping on top of these payments, marking a sharp 44% increase over the past year.

Campbell Robb, Shelter’s chief executive, said: “It’s shocking to think that so many families will be starting the New Year with a huge weight hanging over them, trapped in a daily struggle to keep their home.”

Following a string of price hikes, people are increasingly turning to loans. Loan companies are vying for customers by offering competitive rates, and Clydesdale and Yorkshire Bank have come up trumps.

At 5.1% APR, it is offering the lowest personal loan rate in over five years – although the deal is only available for individuals with a spotless credit history.

Compare balance transfer credit cards at Propertywide.

Posted by: WarrenWilson Categories: Finance Tags: , , 1 Comment

One Response to 1m payday loans in 2012 to cover mortgage or rent

  1. avatar Andrew says:

    Property inflation is the worst kind of inflation because it does the most harm. It would therefore be helpful if your site and others stopped talking about further inflation as though it is a good thing by calling it a “recovery.” We need deflation in property prices to activate the market and give people a chance!