Doorstep sharks are challenged

Loan sharks and doorstep lenders who prey on financially vulnerable people are about to be given a run for their money, thanks to the launch today of a mortgage and loans initiative by a housing association.

Places for People housing association has teamed up with the Co-operative Bank to offer its residents low-cost loans aimed at undercutting the extortionate rates charged by predatory lenders.

People who have been turned down for loans by high street banks, usually due to existing debts, often fall foul of doorstep lenders, some of whom charge rates of interest as high as 900% according to the Consumers' Association. The result is that exorbitant repayments leave many people trapped in a spiral of debt, sabotaging their chances of ever getting on the housing ladder. Doorstep lending in the UK is estimated to be worth £2bn annually, with around 3 million customers.

Places for People says it hopes to help residents avoid the pitfalls of high interest loans by offering an affordable alternative. They have set up a separate finance arm to administer loans of between £250 and £3,000, while the Co-operative Bank will offer a range of mortgage products. Places for People residents from its 57,000 households are eligible to apply.

Mortgages will be available to residents across the UK as of today, while loans will kick-off with a pilot scheme open to 7,000 individuals in the north-west.