Housing costs push tenants and homeowners towards payday loans Tenants and homeowners are turning to payday loans to help them cover housing costs, according to housing charity Shelter. Photograph: Mark Richardson/Alamy Almost two thirds of the population are struggling to pay their rent or mortgage, with almost 1 million people turning to payday loans to cover housing costs, according to housing charity Shelter. Of those who said they were struggling, 4%, or 1.4 million people, are potentially at risk of losing their homes as they have already fallen behind with payments, said the charity. Figures showed that 20% said they were constantly struggling to pay their rent or mortgage - a 44% increase since Shelter interviewed the same number of people in December 2011. The charity said its research indicated that almost 1 million people had used a short-term fix in the form of a payday loan in the last 12 months to meet the cost of their rent or mortgage. A further 2.8 million had used an unauthorised overdraft, with 10% of those doing so every month. Last year Shelter found a similar number of people using payday loans to meet their rent or mortgage payments. Debt counselling charity StepChange warned recently of the growing danger of reliance on payday loans, which commonly come with annual interest rates of up to 4,000%. It said that the number of people seeking help with payday loans had increased by almost 300% in the past two years. "It's shocking to think that so many families will be starting the new year with a huge weight hanging over them, trapped in a daily struggle to keep their home," said Shelter's chief executive, Campbell Robb. Payday loans may seem like a quick fix, but the huge interest charges mean things can quickly spiral out of control. It is vital that anyone who is having difficulty paying their rent or mortgage gets advice now. Separate findings from insolvency practitioners Templeton LPA showed that, while the number of tenants who were evicted in 2012 increased marginally from the year before, the number in serious arrears has remained more or less static. However, there were still 86,000 people in severe arrears: - defined as two months or more behind on their rent - in the last quarter of 2012. "Tenants' finances have suffered a gruelling combination of rising living costs and rental inflation throughout much of 2012," said Paul Jardine, director and receiver at Templeton LPA. With many budgets balanced on a knife edge, a slight reprieve from rapid rent rises towards the end of the year has been very significant. But the recent strength of the labour market has played the biggest role in halting the upwards climb in the number of tenants in severe financial difficulty.