Credit cards used to pay mortgage and rentOver a million households have resorted to plastic
17 October 2007
More than one million households have resorted to using credit cards to pay their mortgage or rent during the past year, research showed today.
Around 6% of people admitted they had needed to use credit to meet their housing costs in the past 12 months, according to housing charity Shelter.
Younger people were more likely to be relying on credit to stay on the property ladder, with 7.5% of 18 to 24 year olds admitting they had used a credit card for their mortgage or rent.
A housing advice service warned that people using credit cards to pay their mortgage were getting themselves into a 'spiralling maze of debt' in which the credit available to them would eventually run out.
Shelter also partially blamed the problem on irresponsible mortgage lending, saying banks and building societies were allowing people to overstretch themselves financially, forcing them to turn to credit cards just to stay afloat.
Shelter Chief Executive Adam Sampson said the situation was shocking.
He said: 'The number of people hit by the credit crunch, interest rate hikes and unaffordable housing costs are rapidly rising.
'For many people trying to keep a roof over their head desperation is driving them to short-term, high-cost borrowing.
'Ordinary people are being forced to seek more risky and expensive ways to stave off the threat of eviction and repossession.'
The group said most credit card companies charged interest of between 15% and 18%, nearly 50% more than even the highest mortgage rates of 11% to 12% for people with adverse credit histories.
It added that for people with poor credit ratings, credit card companies charged interest rates of up to 40%, five times higher than the average mortgage rate.
Stuart Freeman, Director of Services at Community Housing Advice Service, which offers advice on housing and debt, said: 'There is such pressure on people's budgets that paying your mortgage or rent by credit card, then paying that card with another card is becoming the norm for many people.
'It leads to an ever-spiralling maze of debt, and eventually the credit simply runs out.'
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