FTBs using credit cards to pay mortgages

A worrying number of first time buyers (FTBs) are using credit cards to keep up with mortgage payments.

Shelter, the homelessness and housing charity, claims that more than one million householders have turned to credit to keep up with mortgage or rent payments in the last year.

It means that many borrowers are putting themselves in the unenviable position of borrowing on high rates in order to meet the costs of another loan.

The charity points out that there are risks involved in handling finances in this way and says that the recent global credit crunch is making things worse.

"The number of people hit by the credit crunch, interest rate hikes and unaffordable housing costs are rapidly rising," said Adam Sampson from Shelter.

Stuart Freeman, director of services at Community Housing Advice Service, added: "There is such pressure on people's budgets that paying your mortgage or rent by credit card, then paying that card with another card is becoming the norm for many people.

"It leads to an ever spiralling maze of debt and eventually the credit simply runs out," he continued.

FTBs were given a boost this week when it was revealed that the Bank of England's Monetary Policy Committee voted 8-1 in favour of maintaining the base rate of interest, further fuelling speculation that a cut in interest rates is on the cards.

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