Consumers turning to credit cards to pay their mortgage : Credit Card Guide

Consumers turning to credit cards to pay their mortgage

According to the results of a recent survey many consumers in the UK are having to turn to costly credit cards in order to make some of their mortgage repayments, with many finding it increasingly difficult to keep up with repayments based solely on their income.

Homeowners are struggling with repayments for a number of reasons, and an alarming number of households have made repayments with their credit cards over the past twelve months, according to the result of the poll, which involved two thousand consumers.

The poll was carried out by YouGov, and indicated that the worst hit were first time buyers, a larger proportion of which were using their credit cards to make repayments on their mortgages. According to the results of the survey around 8% of 18-24 year olds have used their credit cards to make mortgage repayments in the last twelve months. The overall number of people using their credit cards to pay their mortgage came to around 6%, equating to around a million people.

Experts state that amongst the factors that have affected consumers' ability to keep up with repayments are the effects of the credit crunch, higher interest rates and repayments, and unaffordable housing costs. One industry official stated: "The number of people hit by the credit crunch, interest rate hikes and unaffordable housing costs is 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."

One housing advisor added: "There is such pressure on people's budgets that paying your mortgage or rent by credit card -- and 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."

Tom Smith
25th October 2007

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