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Families at risk of spiralling “further into crisis” without action on housing costs and payday lenders

15 Ionawr 2014

As new figures from Shelter find people are struggling to pay their rent or mortgage and 2% said they had taken out a ‘payday’ loan to help pay the rent or mortgage, Citizens Advice warns of the increasing pressure on household budgets.

Citizens Advice Chief Executive Gillian Guy said:

“With the intense pressure on families it is sadly unsurprising that many have to borrow to keep a roof over their head.  The combined impact of flat-lining wages, energy bills rising seven times the rate of earnings and cuts to housing support is taking a huge economic and human toll.

“It is extremely worrying that the default option for far too many people is to turn to a payday lender to get them through the month.  Payday loans may appear to be a quick fix but often turn into a long-term debt problem as people struggle to pay back the loan and high interest rates and charges further increase debts.

“The number of people coming to us with rent arrears is up in every region of England and the number of people behind with their mortgage has gone up 20 per cent since the start of the recession. Without full-blooded commitment to improving our housing stock, the number of people at risk of losing their home will continue to rise.  

“It’s good that inflation is down, but house prices are up 8 per cent since last year and unless we increase the supply of affordable homes then this worrying situation will spiral further into crisis.”  

The new findings from Shelter come as Call Credit announces plans for greater data-sharing which would allow lenders to get hold of real-time data on people’s financial circumstances.

Gillian Guy said:

“More information on people’s financial situation could help borrowers avoid getting into difficulty with multiple loans, providing lenders use the data and make wise decisions.  Citizens Advice has found that 61 per cent of payday loans come without proper checks and we are concerned that, even when lenders do assess people’s financial circumstances, they don’t always make responsible decisions as to who is or isn’t a suitable borrower.

“There is a business incentive for lenders to use this information as it should help them avoid lending to people who don’t have the money to repay.”

Notes to editors:

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.