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22 October 2007
Over the past year an increasing number of homeowners in the UK have found it more and more difficult to cope with mortgage repayments from their regular income. This is because there have been five interest rate rises since August of last year, taking the base rate up from 4.5% to 5.75%. For homeowners on variable rate mortgages this has meant huge rises in repayments, which they have had to try and find the money for every month.
According to a recent survey many of these struggling homeowners have been forced to turn to credit cards in order to make some of these repayments – putting themselves in danger of spiralling debt according to some experts. Two thousand consumers were polled as part of a recent survey, and the results of the poll revealed that younger homeowners, usually first time buyers, in particular were reliant on their credit cards to keep up with mortgage repayments. Around eight percent of homeowners aged between eighteen and twenty four admitted that they had made repayments with their credit cards in the past year.
The result of the study also showed that overall around six percent of homeowners had used their credit cards in the last year to make repayments, and this equates to around one million homeowners. The rise in the number of people turning to credit cards to keep up with mortgage repayments reflects the effect that the credit crunch and the series of interest rate rises has had.
One industry expert 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."
Another industry professional expressed concern over the risks associated with using credit cards to make mortgage repayments. Consumers that do this are hit with extortionate interest charges in some cases, and are at increased risk of quickly running up credit card debt that they are then unable to repay.
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