One in seven use high-interest credit to keep their homes
One in seven Britons has turned to credit such as a payday loan or unauthorised overdraft to help cover rent or mortgage in the last year, a study from Shelter has found. It has warned that relying on such methods could lead to people losing their homes.
Shelter urged those sinking into a "spiral of debt" to seek immediate help, after finding that one in seven people has used a payday loan, dipped into an unauthorised overdraft, or used another type of loan or credit cards to cover their rent or mortgage in the last 12 months.
This proportion equates to almost seven million people when projected on a national scale, the charity said.
Specifically looking at payday loans, the charity also found that 2% of people have used at least one payday loan to fund their rent or mortgage in the last year, equating to almost one million people nationally.
It said such loans, which are intended for short-term use and can charge as much as 4,000% APR in some cases, are an "unsustainable" way of paying for housing.
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.
"Every two minutes someone in Britain faces the nightmare of losing their home."
The Shelter report will fuel concerns about people seeking high-interest credit, following a report from insolvency trade body R3 last month which predicted payday loan companies will see a surge in demand in the coming months as Britons struggle with their finances."