Credit used for rent of mortgage

Kennyboy66

wotsthat wrote: »

It doesn't stand up at all.

To back up a stat which doesn't bear scrutiny you've found another stat which is of a similar order and have assumed they are related.

Let's say they are related for arguments sake. 1.2 million pay day loans issued each year and 1 million people take a pay day loan each year to pay their mortgage or rent.

Does that sound anywhere near correct? Are you honestly trying to suggest that pretty much 100% of pay day loans issued are used to pay rent or mortgages?

No it doesn't sound correct.

But in fact in 2009 there were 1.2 million people taking out 4.1 millions loans at an average value of £300

wotsthat

Kennyboy66 wrote: »

But in fact in 2009 there were 1.2 million people taking out 4.1 millions loans at an average value of £300

Does that go any way towards proving that one million people in 2011 used a pay day loan to pay their rent or mortgage in 2011? (we mustn't forget that the figure we're trying to 'prove' is based on 80 people in the UK saying they'd used a payday loan to pay rent or mortgages).

Chucking different numbers at a bad stat doesn't make it a good stat.

The simple fact of the matter is that if a million people are having to fund rent and mortgages throughout the year it would be reflected in repossessions and arrears.

DervProf

wotsthat wrote: »

The simple fact of the matter is that if a million people are having to fund rent and mortgages throughout the year it would be reflected in repossessions and arrears.

Eh ?

I take it you mean that those million people are funding their mortgages/rent with payday loans. If so, how would that be reflected in repo's and arrears ?

Graham_Devon

The real fact is 1.2m people are taking pay day loans (this will have increased, as widely recognised over the last year).

What they are taking them for is anyones guess. But considering they are pay day loans, not doorstep loans, we can only assume they are taking them for living cost issues. The biggest living costs, outside of emergencies and unknown repairs etc, is the mortgage / rent.

Some have stated in a poll that they are using them to cover rent/mortgage, but we cannot use this data on this as they got paid 50p, maybe (same as any other polls / surveys which we are allowed to rely on dependant on what he result suggests).

Theresfore, it stands to reason that people are using pay day loans to pay these items. Maybe not specifically, maybe the mortgage has taken out a chunk and they need a top up.

Either way, I'm not sure what others assume people are taking such loans for.

I think the point being made by some is that the payday loan may not have been taken specifically to pay the specific mortgage / rent payment. That's a fair point. It could have been taken because they haven't got enough money to pay the council tax after the rent. But either way, they are usually taken for living costs, and most will sight their rent / mortgage as the culprit....regardless of whether they are taking is specifically to pay that mortgage that month.

In other words, there is no proof the loan is going directly on the mortgage and nothing else, therefore this research is rubbish. My blind eye has been turned.

wotsthat

DervProf wrote: »

I take it you mean that those million people are funding their mortgages/rent with payday loans. If so, how would that be reflected in repo's and arrears ?

Because it's impossible over any significant period to fund a mortgage with a pay day loan.

Day 1 - I can't afford my £300 mortgage. I borrow £300 from Wonga for a month

1 Month Later - I need to pay £300 for my mortgage plus the, now, £398 Wonga want repaid. Just a month ago I couldn't afford £300 let alone £698. No problem - I'll get a different pay day loan for the mortgage and roll over the wonga loan

2 months later - I need to pay £300 for my mortgage, £398 for the new pay day loan and £526 for rolling over the original wonga loan. On day 1 I couldn't find £300 now I need to pay £1224.

How long before I get into arrears with my mortgage?

Don't get me wrong. The spin that these companies try to give along the lines of it being accessible credit for those denied by mainstream lenders is a joke. They prey on the desperate, the vulnerable and the financially illiterate.

To try and argue that anything like the numbers indicated have relied on pay day loans to pay rent or mortgages though is laughable. The stats are obviously flawed and application of real world numbers make a mockery of the assertion.

System

You generally pay a payday loan back within a week.

Graham_Devon

wotsthat wrote: »

Because it's impossible over any significant period to fund a mortgage with a pay day loan.

And? That wasn't what the survey asked.

Just have you used "a" payday loan or other loan in the last year. It does NOT state anywhere that people are relying on them month in month out.

Disingenuous.

I've got a flexiloan, that I dip into if I need it. Much the same really as a payday loan apart from the facility is more like an overdraft. That doesn't mean I need it every month, as you would imply.

julieq

Back to the old bear thing here that a VI is only a VI when it supports HPI.

Shelter are a pressure group, and it is massively in their interest to portray a particular view of the lower end of the accomodation market. And so when they post figures you have to look at them in that light and go back to basics.

As people have said, the ONLY accurate indicators of people having problems with mortgages is arrears and repossession rates, and these are miniscule. I posted a full breakdown of these a few days ago, but it's a fractional problem only.

Are people using credit to part pay mortgages? Well quite possibly. I did. I stoozed £30K at 0% over a couple of years and used the money to offset my mortgage. Someone borrowing at 6% on a mortgage might well be doing that now - transfer fees now come into play when they didn't a few years ago. How significant? Don't know. Wouldn't make a claim one way or another.

Are people using payday loans? Yes. Does that mean they're generally short of money? Yes. So if you use a payday loan and you have a mortgage that means that you need more money than is coming in on a temporary basis, which could be for a number of reasons including short term cashflow, some large expenditure that month. How significant? Don't know. Wouldn't make a claim one way or another. Exactly the same argument with credit cards or overdrafts.

Use of credit to pay a mortgage is only a problem if it's sustained over a period, leading to bankruptcy ultimately. There's no evidence in the higher level stats that that happens. Shelter are doing what they are there to do, which is to attract attention to the problems of people at the bottom of the income food chain in finding affordable, decent accomodation, and to do that they are setting up their survey to ask a very carefully directed question and spinning the results in a particular way to create a press release. The survey methods are open to question too, but that's a side issue here.

If this was an estate agent working in the opposite direction the bears would be all over it with VI accusations. We even get VI status accorded to official government statistics for heavens sake. So why the blindness when the conclusion points in the opposite direction?

Confirmation bias.

FTBFun

Graham_Devon wrote: »

And? That wasn't what the survey asked.

Just have you used "a" payday loan or other loan in the last year. It does NOT state anywhere that people are relying on them month in month out.

Disingenuous.

I've got a flexiloan, that I dip into if I need it. Much the same really as a payday loan apart from the facility is more like an overdraft. That doesn't mean I need it every month, as you would imply.

They're really not. That's fairly obvious just by looking at the difference in the APR for flexiloans (I saw an HSBC one for 17.9%) and wonga.com payday loan (4200%+).