Millions trapped on a treadmill of debt

Nia Williams

September 20, 2013

And, despite the economy showing positive signs of recovery, they are not optimistic about their situation improving any time soon.

New research by Circle Housing Group, the provider of affordable housing, found that around 10 million adults – or one in five (21%) – took out a loan in the past 12 months. More than half (56%) of these borrowers expect to do the same in the next year; this compares to only 8% who have not taken out a loan this year.

The study found that a third of borrowers used loans to pay for food and basic living essentials (28%), while around one in five needed help to cover mortgage and credit payments (21%) or energy bills (17%).

Circle commissioned ComRes to carry out the survey as part of its work to understand the issues facing its residents in the current climate of austerity and changes to the welfare state. In the past year alone, Circle has provided financial advice to around 10,000 residents.

Matt Earnshaw, group financial inclusion manager, at Circle, said: “These figures are very concerning and demonstrate the difficulties that many people are currently facing when it comes to managing their day to day finances.

“In the social housing sector we know many are struggling to deal with rising food bills and spiralling energy costs and are being caught out by emergencies and life changing events such as ill health, which can make debt become unmanageable.

“Our general advice to anyone in this position is to get help right away and deal with the debt quickly.”

One in five borrowers took out a loan in the past 12 months to cover one-off payments such as replacing essential white goods (20%) or paying for Christmas (19%). While over a third (34%) of people with loans needed to pay for multiple goods or services indicating that Brits have several everyday needs that they cannot afford.

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