Three percent of UK adults - 1.5 million people - had to resort to borrowing to pay their rent or mortgage in the last month, according to new research by the Debt Advisory Centre.
The figures show that those aged between 25 and 34 were the most affected, with 7% of the age group resorting to credit to cover these costs. Perhaps unsurprisingly when considering London’s inflated property prices, people in the capital were the most likely to have used credit to pay their mortgage or rent, with 7% having done so.
Ian Williams of the Debt Advisory Centre commented on the findings:
“Although there are signs of recovery in the economy, this is a timely reminder that many people are still left struggling to get by from month to month. And the problem could get worse when interest rates begin to rise in the future.
“Most of us need to borrow a bit of money from time to time, but if you find yourself borrowing money to cover essential costs then that could be a sign of a serious problem.
“Your mortgage or rent is arguably your biggest priority cost, so borrowing money to cover that could be particularly serious. If you think you're having problems, it's a much better idea to get in touch with your mortgage provider or landlord to explain the situation. If that doesn't help, then you should seek expert advice.”
Justin Modray, former independent financial adviser and manager of candidmoney.com said the situation is “sad and worrying.”
Modray also added to concerns that the problem will become worse when interest rates begin to rise:
“Given mortgage rates are currently very low by historic standards the situation will likely only worsen when the Bank of England eventually starts to raise its base rate.”
With wages apparently failing to rise to meet living standards, many families and individuals are feeling the pinch. Sound financial planning is vital to prevent falling into a cycle of debt and numerous charities and consumer groups are welcoming the introduction of financial education into the national curriculum this September.