Almost one million people have taken out a payday loan to help pay their rent or mortgage in the last 12 months2, a new survey from Shelter reveals today.
The survey also reveals that almost seven million people3 in total are relying on credit in some form to help pay their housing costs, using payday loans, unauthorised overdrafts, other loans or credit cards.
The results reveal the spiral of debt that people are falling into in order to keep a roof over their head.
The YouGov survey carried out last month asked 4,014 people in Great Britain if they had used payday loans, unauthorised overdraft, other loan or credit cards to help pay their rent or mortgage in the last 12 months. One in seven respondents (15%) who took part said yes, representing a national figure of almost seven million people, with almost one million people using payday loans.
The charity warns that the New Year could bring with it a risk of homelessness, for those who are struggling with their housing costs and is urging anyone worried about their debts to make seeking early debt advice their New Year’s resolution.
Shelter has a network of specialist advice services around the country, a free telephone helpline and online advice available at shelter.org.uk/debt, including a new budget calculator.
Campbell Robb, Chief Executive of Shelter, said: “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home.
“Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable. It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness.
“Every two minutes someone in Britain faces the nightmare of losing their home. We urge every single one of these people now relying on credit to help pay their rent or mortgage to urgently seek advice.”
Martin Lewis of MoneySavingExpert.com, said: “The UK is the crock of gold at the end of the rainbow for the world's payday lenders. They've been regulated out of other countries and jump for joy at our lax supervision. That's why these 4,000% APR lenders are exploding across British high streets. Yet these astronomical APRs aren’t the real danger – that comes from the rollover. This is where people can't repay at the end of the month and compound interest kicks in.
“It's incredibly worrying there's now evidence of people using payday loans to meet housing costs. Many struggling with core rent or mortgage commitments will struggle to repay payday loans on time too. While it's an obvious temptation to grasp these loans as a lifeline, in the long run it may hurt more than help. Instead I'd urge anyone struggling with payday loan and housing debts to get in touch with one of the great non-profit, non-judgmental advisors out there, such as Shelter – the sooner the better.”
Notes to Editors
1. In December 2011 Shelter commissioned YouGov to conduct a nationally representative survey of 4,014 adults in Great Britain. Fieldwork was undertaken between 2nd and 5th December 2011. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
2. The survey asked respondents if they had taken out one or more payday loans to help pay their rent or mortgage in the last 12 months. 2% of respondents who took part said yes, representing a national figure of 936,000 people.
3. The survey asked respondents if they had used a payday loan, unauthorised overdraft, other loan or credit cards to help pay their rent or mortgage in the last 12 months. 15% of respondents who took part said yes, representing a national figure of 7 million people.
4. The estimate of the number of GB adults using a payday loan (936,000) or form of credit including payday loans, unauthorised overdrafts, other loans or credit cards (7 million) to meet housing costs is based on the latest estimates from the Office of National Statistics which indicate that there are 47.8 million adults in Great Britain. Source: http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-231847
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