Homeowners 'are getting sucked into a spiral of debt'

08 2008
An alarming number of homeowners struggling to make ends meet are trapped in a vicious circle of debt, it has been revealed.

Moneysupermarket.com figures show that two in three people who take out a loan in order to consolidate debts have to take out a further loan while still repaying the first one.

With financial pressures increasing, one in nine borrowers say they are powerless to pay off their debts and one in ten say their situation is getting progressively worse.

Worryingly, almost half of these people are incapable of learning from their mistakes - as 44 per cent would entertain the idea of taking another consolidating loan out to replace the existing one.

"I am shocked so many people are plunging themselves into a further debt sentence via the very mechanism they've used to help reorganise their finances," commented Tim Moss, head of loans at moneysupermarket.com.

"Many people's finances are being stretched to breaking point by the spiraling cost of living and the credit crunch. But don't bury your head in the quick sand of debt. No matter how much providers lend you, you can't borrow your way out of it."

With consumers struggling to cope with rising energy, food and mortgage bills, people who rent property are often the best off as their outlay is usually lower than those with a mortgage.
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