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Low earners in debt `at risk of homelessness`

12/11/2009

According to research by the Resolution Foundation thinktank, a quarter of low-income households are spending more than a quarter of their monthly income servicing their debts, the Guardian reports.

Published this morning - before the unemployment figures were released - the article in the Guardian stated that: `Britain`s 14.3 million low earners are in danger of being sucked into a whirlpool of poverty as official figures are expected to show today that the number of unemployed has passed through 2.5 million for the first time in 15 years.`

At 9:30 a.m. the Office for National Statistics revealed that unemployment in fact reached 2.46 million - 7.8% - by the end of September.

Research by the thinktank suggests that low-income households (with an average income of £15,800) are `walking an increasingly precarious financial tightrope`, with 24% spending over a quarter of their monthly income servicing debt - twice as many as three years ago.

The research also found that almost a third of low-income households have high loan-to-value mortgage debts and are in negative equity (i.e. their mortgage debt is greater than the value of their property) - making them particularly vulnerable to homelessness if they were to lose their job.

The foundation is stressing the importance of debt advice and is calling for high-street banks to `involve themselves more in debt counselling` as soon as households with a low income fall behind on their mortgage payments.

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