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Economy still hurting but households start to cope

18th February 2009 Print
Applications for payday loans are at last starting to plateau, indicating that plummeting inflation and falling mortgage rates are finally having a positive impact on households.

Tim Moss, head of loans at price comparison site, said: "Payday loans are the ultimate barometer of how tough things are in much of the real Britain. We saw an explosion of payday loans from January 2008 onwards with more and more people using all of their income on essentials - but still not being able to get through to the end of the month.

"The alarm bells for the economy started ringing loud and clear just over a year ago when the consistent number of applications we had seen throughout 2007 for payday loans suddenly went through the roof.

"By last August, the typical number of people seeking these loans had more than tripled compared to 2007.

"Thankfully though the trend over the past six months has been steady rather than continuing upward on that frighteningly steep line.

"This ultimate barometer of wellbeing at last shows the pressure on households starting to steady."

Payday loans are typically used by employed people who run out of cash just before the end of the month and need a short-term loan of about a week to get by.

Tim Moss added: "The economy is still in a dire state. There are three times as many people needing a payday loan each month than in 2007, but at least the haemorrhaging has stopped.

"We will know the economy is starting to recover when the trend starts heading back down again."