Households paying mortgages with credit cards

kennyboy66_2

Spartacus_Mills wrote: »

http://news.bbc.co.uk/1/hi/business/8450518.stm




I wonder if this will get worse as interest rates go up.

Does anyone know what the long term average/trend is. Is this normal or is it something we should be worried about. Credit card debt is not a problem as long as you use it as free money and pay it back. The article is interesting, and bearish in sentiment, but does not say how many people pay it back 100% when due.

I'm a bit dubious about these 'surveys' particularly when it is the charity's interest to paint things as bad as possible.

As if by magic, Shelter's October 2007 also suggested that 1 million people then were paying mortgage or rent with their credit card.

The cynical among you could even think it was an identical survey dusted down on a slow news day to get Shelter some publicity.

http://www.creditaction.org.uk/debt-statistics/2010/january-2010.html

Meanwhile the actual data from BoE tells us that credit card lending is actually falling on an annual basis (first time since figures were compiled in 1994).
Also balance incurring interest also fell.

On the downside, credit card write offs on the up and forecast to be a record high in 2010.

Really2

kennyboy66 wrote: »

I'm a bit dubious about these 'surveys' particularly when it is the charity's interest to paint things as bad as possible.

I agree, it would not help the charity's cause if they said everything was fine.

I dare say a lot of the survey was done in the daytime in poorer areas so they caught more unemployed.

It may be representative of some, but how representative of the UK as a whole I have my doubts.

tomterm8

kennyboy66 wrote: »

As if by magic, Shelter's October 2007 also suggested that 1 million people then were paying mortgage or rent with their credit card.
.

Paying rent by credit card is only sensible, if you can do it, since that would give you access to 1 months free credit, plus any cash back or air milesd etc. When I was a student I always used to pay rent by credit card. Fabulous. Then you repay the balance in full.

So I get your point. Especially as there are still some good stoozing opportunities, but it only works if disciplined.

Edit: one thing that is very worrying is that the numbers of people struggling with morgage payments should be significantly falling at the moment, since many peoples mortgages are at an all time low, in terms of costs, and there are fewer opportunities to exploit the credit card system than there were.

lemonjelly

Really2 wrote: »

I agree, it would not help the charity's cause if they said everything was fine.

I dare say a lot of the survey was done in the daytime in poorer areas so they caught more unemployed.

It may be representative of some, but how representative of the UK as a whole I have my doubts.

How cynical of you!

In seriousness, it is something I have experienced for years, literally.

Of course, that is based upon the cross section of society who form my client base. However, I would put forward that I would estimate the majority of them are in employment (lower end pay scales) or have had to cease work for one reason or another...

DaddyBear

Small anecdotal: Was chatting to a Taxi driver last week. He bought in 2007 with a mortgage he couldn't afford, around £1k per month. He racked up several thousands of pounds on his credit card to pay the mortgage. He was just about to go bankrupt when the good old BOE dumped the interest rates. His mortgage is now £400 per month and he is slowly paying off his debt.

Don't underestimate the effect that ZIRP has had in temporarily stabilising the housing market. I'm sure there are thousands of people out there who were on the brink until ZIRP. Unfortunately ZIRP cannot last forever.

ruggedtoast

DaddyBear wrote: »

Small anecdotal: Was chatting to a Taxi driver last week. He bought in 2007 with a mortgage he couldn't afford, around £1k per month. He racked up several thousands of pounds on his credit card to pay the mortgage. He was just about to go bankrupt when the good old BOE dumped the interest rates. His mortgage is now £400 per month and he is slowly paying off his debt.

Don't underestimate the effect that ZIRP has had in temporarily stabilising the housing market. I'm sure there are thousands of people out there who were on the brink until ZIRP. Unfortunately ZIRP cannot last forever.

I know someone who in 2007 bought a small house for £300,000 (it had sold in 2005 for £250,000) on an interest only mortgage.

At the time she was paying over £1000 a month - now shes paying a little over 200 quid.

macaque_2

If 1m people are using credit cards to pay mortgages, then 'approximately' million people are in properties they cannot afford (on top of the ones already in default). This comes at a time when interest rates are at their lowest level for 300 years and salaries/jobs are shrinking. House price recovery for 2010? Give me strength!

damanpunk

DaddyBear wrote: »

Small anecdotal: Was chatting to a Taxi driver last week. He bought in 2007 with a mortgage he couldn't afford, around £1k per month. He racked up several thousands of pounds on his credit card to pay the mortgage. He was just about to go bankrupt when the good old BOE dumped the interest rates. His mortgage is now £400 per month and he is slowly paying off his debt.

Don't underestimate the effect that ZIRP has had in temporarily stabilising the housing market. I'm sure there are thousands of people out there who were on the brink until ZIRP. Unfortunately ZIRP cannot last forever.

I can't even begin to imagine how you'd get into that kind of conversation with a taxi driver?!

kennyboy66_2

macaque wrote: »

If 1m people are using credit cards to pay mortgages, then 'approximately' million people are in properties they cannot afford (on top of the ones already in default). This comes at a time when interest rates are at their lowest level for 300 years and salaries/jobs are shrinking. House price recovery for 2010? Give me strength!

Conveniently ignoring the fact that the report say mortgages or rent.

I wonder why that is ?
The most likely group to have to use their credit card in this way is the 18-24 age group.

Perhaps they all bought a house very young.

julieq

Macaque, read the article before getting overexcited. 1 Million people have used their credit card at some point to "pay their mortgage or rent"

No data on the relative proportions here. And would Shelter not qualify as a VI?

Total non-story.