Thousands getting into debt to meet housing costs

Posted on January 16th, 2014 | Categories - News

iStock_000007329749XSmallNew research has shown that thousands of people are taking out loans to help them keep up with their rent or mortgage payments, whilst many more are burying their head in the sand over late payments.

Research from the housing charity Shelter, has found that nearly 20% of mortgage holders and tenants have had to take borrow money to keep up to date. Furthermore around 10% of people are concerned they will not be able to pay their mortgage or rent at the end of January.

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The staggering statistic shows that the economic recovery has yet to filter down to everyone, with many people using loans, overdrafts and even credit cards to help keep a roof over their head. If the statistics weren’t shocking enough, a small percentage of people have had to resort to payday loans, which charge extortionate interest rates often in excess of 1,000%, to keep up with payments.

The survey of 4,000 people also revealed an alarming trend of people not facing up to their financial problems:

  • 25% of people would feel ashamed that they couldn’t pay their mortgage or rent
  • 40% wouldn’t admit to friends or family that they were experiencing difficulties
  • 18% of people admit they wouldn’t open their post if it was a bill or reminder for payment
  • Shockingly, 14% of people admit to throwing away such post without even opening it

Commenting on the figures, Liz Clare, an adviser at Shelter, said: “We’re now seeing a stream of cases of families who’ve been unable to cope with mounting rent or mortgage bills and feel at breaking point. We all know how difficult it can be to face up to financial problems and we often hear from people who’ve been avoiding urgent post, but the reality is that not confronting it means things can spiral out of control.”

Clare continues: “One caller to the helpline arrived home to her rented flat to find the locks had been changed. She hadn’t realised that a court hearing had even taken place because she hadn’t felt able to open her post after falling into arrears with her rent.

“We hear from people every day who are struggling, so you are not alone. Our message to anyone struggling to pay their rent or mortgage is that we’re on your side. Come to us for help early on for the best chance of keeping your home.” (Source: Shelter)

Concern over first time buyers

Shelter’s research comes in the same week that research from Save our Savers highlighted the growing gap between house prices and wages, whilst figures from the Council of Mortgage Lenders show the number of first time buyers has rocketed.

The data from Save our Savers, shows that in the 1990s the average house price was approximately five times the average salary, this has now doubled and looks set to increase as house price inflation outstrips wage rises.

Read the full story by clicking here.

Whilst the CML figures show that the number of first time buyers in November rose by a massive 24% compared to the same month in 2012.

There is concern amongst some experts that first time buyers are stretching themselves to far in an effort to get onto the housing ladder and will be left exposed if interest rates were to rise in the coming months and years.