Borrowers turn to personal loans to meet housing costs

Rising mortgage or rental costs have forced 7% of people to take out a personal loan in the past year, according to research from price comparison site Moneysupermarket.

Thursday, July 03, 2008

It also found 9% of people have had to spend a lot more on their credit cards because of increased housing costs, and 20% of people in their forties have been forced to turn to loans or credit cards to keep their heads above water.

It claimed with £30bn worth of mortgage deals coming to an end in July, many more people will be thrown into the “vicious situation” of facing much higher monthly repayments.

Tim Moss, head of loans and debt at Moneysupermarket, said: "It is a very serious situation when you have people turning to a short-term solution to fund a long-term product.

"Having a roof over your head has to be your top priority but to be funding that with a loan you might default on or with a credit card that will eventually charge you interest of over 15% is not the solution in the long term. Approximately 4.1 million households have fallen into this trap in the past year – and it needs to be remembered that taking out a loan specifically for a mortgage goes against lenders' rules."

Source: http://www.mortgagesolutions-online.com/