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MSE News: Millions use payday loans to pay the mortgage

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MSE News: Millions use payday loans to pay the mortgage

edited 30 November -1 at 1:00AM in Mortgages & Endowments
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MSE_GuyMSE_Guy MSE Staff
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edited 30 November -1 at 1:00AM in Mortgages & Endowments
This is the discussion thread for the following MSE News Story:

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  • DVardysShadowDVardysShadow
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    From TFA
    Specifically looking at payday loans, the charity found 2% of people have used at least one payday loan to fund their rent or mortgage in the last year, equating to almost one million people nationally.

    Millions? Shurely shome exaggeration.
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  • fuzzybear01fuzzybear01 Forumite
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    2% of who? I like to see the research methods when faced with statistics. It seems a bit vague
  • dtaylor84dtaylor84 Forumite
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    Surely anyone with a rent/mortgage payment and an in an overdraft could be said to "use [a] payday loan or overdraft to find their rent or mortgage"?

    You'd hope that if push came to shove it would be the other things they spent on, not the mortgage, that they would be unable to afford?

    So, unless the only thing they're paying for every month is their mortgage, I don't think this is a meaningful statistic.

    Sensationalist, though...
  • jamesdjamesd Forumite
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    The original Shelter press release can be found at http://england.shelter.org.uk/news_and_blogs/january_2012/millions_rely_on_credit_to_pay_for_home . It's deliberately not a live link.

    They say that it was based on a YouGov survey in December 2011 which asked "4 ,014 people in Great Britain if they had used payday loans, unauthorised overdraft, other loan or credit cards to help pay their rent or mortgage in the last 12 months. ... One in seven respondents (15%) who took part said yes, representing a national figure of almost seven million people, with almost one million people using payday loans."

    No details of what was done to avoid self-selection that may have favoured responses from those who did borrow and those who weren't working and had time available to take the survey.

    Anyone who's having trouble with their mortgage should have a chat with their lender. At the moment lenders are showing exceptional levels of understanding and tolerance for people who are having difficulties paying and are routinely offering things like interest only payments or debt or budgeting help to those who are having trouble. The sooner you seek help the easier it is because you won't have the extra costs of other borrowing to repay!
  • Percy1983Percy1983 Forumite
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    It does make me wonder how many would default on a mortgage without even thinking about cancelling there Sky/iPhone contracts and quiting smoking.
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  • 2% - hmmm, typically with a sample size of that 4,000 or so, the scaling up would only give a confidence level of + or - 2%, so we're actually looking at somewhere between 0% and 4%. That 2% confidence level also assumes a decent amount of randomness, which I don't think yougov can promise given the way in which they carry out surveys.
    So, we could potentially be looking at near enough zero percent actually being affected by this!
  • CatslovelycatsCatslovelycats Forumite
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    Plus "unauthorised overdraft, other loan or credit cards" aren't exactly payday loans...
  • mrmajikamrmajika Forumite
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    As someone who has in the past completed YouGov polls (and the like) to supplement my income, I can confirm that I would have answered 'Yes' to the PayDay loan question, just to have the opportunity to earn the 50p for the survey, despite never having actually had one.

    That is why such online polls are so flawed. People simply answer in a way that they think will minimise their chances from being screened out.

    If I click that I haven't had a PayDay loan I don't earn any money and I don't get to complete the survey. If I click that I have had a PayDay loan then I get the chance to answer a few more questions and earn my 50p.

    The stats produced by YouGov are IMO way off the mark.
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  • It's a very loose way of surveying though. I suppose that technically, I could fall into the 15(?)%. This would be because during last Winter's January freeze-up, I couldn't work for a while. Therefore, I used a credit card to pay my council tax for one month to leave enough in the bank to pay the mortgage. Although there were a few hundred quid's worth of cheques in the bank (I'm self-employed), they would not have cleared in sufficient time. When the cheques cleared, I did a bank transfer to pay the credit card. Now I suppose this could count as using my credit card to pay the mortgage but really, it was more about plugging a bit of short term (literally a few days) cash flow deficit.
  • Radionotme wrote: »
    2% - hmmm, typically with a sample size of that 4,000 or so, the scaling up would only give a confidence level of + or - 2%, so we're actually looking at somewhere between 0% and 4%. That 2% confidence level also assumes a decent amount of randomness, which I don't think yougov can promise given the way in which they carry out surveys.
    So, we could potentially be looking at near enough zero percent actually being affected by this!

    Erm... that's utter nonsense. The 95% confidence bounds are at 1.59% and 2.48%.

    Of cause, the issue with the survey is that it appears to exclude people who are too busy to do silly surveys.
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