Mortgage missed payment levels rise

Missed payment rates among mortgage holders have returned to levels seen at the height of the cost of living crisis, Which?’s latest consumer insight tracker finds, as the Spring Budget leaves some feeling low about their future household finances.

In the month (up until 8th March), 8.1 per cent of mortgage holders missed essential payments such as housing, utility bill, credit card or loan payments. This is the third highest level Which? has recorded for mortgage holders since it started tracking it in April 2020 – only slightly lower than the high of 8.5 per cent in both March 2023 and November 2023.

Missed payment rates were also high among renters – with one in seven renters (14%) missing essential payments in the month to March 8th. On the other end of the scale, households who own their home outright actually saw a decrease in missed payments to 1.6 per cent, down from 2.8 per cent in February.

It was a rise in missed utility bills and credit card or loan payments that drove the overall increase in missed payments for mortgage holders and renters – suggesting that both groups may be prioritising housing costs over other essential bills.

For example, mortgage holders’ missed mortgage payment rate dropped by 0.2 per cent this month to 2.4 per cent, while credit card or loan missed payments rose by 2.4 per cent to 4.7 per cent and missed household bill payments rose by 2.8 per cent to 4.8 per cent.

Overall, 2.4 million households (8.6%) missed at least one payment in the month to March 8th – a significant increase from the 1.9 million households in the previous month. This suggests that the cost of living crisis is still having a significant impact on household finances and people’s ability to cover the cost of essential bills.

15.1 million households (54%) reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is significantly lower than the 60 per cent seen last March but higher than levels seen in 2020 and 2021.

Consumers’ confidence in their own financial situation fell this month. One in four (24%) consumers believe their household financial situation will get better over the next 12 months, while three in ten (31%) thought it will get worse – giving a net score of -8.

Confidence in the future UK economy remained at similar levels to last month. Only one in five (21%) said they think the UK economy will get better over the next 12 months, whilst half (50%) believe it will get worse – giving a net confidence score in the future economy of -29.

The Spring Budget has left some feeling low about their future household finances and the economy. One in eight (13%) of people who gave a reason for their level of confidence mentioned policies from either the Spring Budget or the Autumn Statement.

With interest rates still high, consumers are likely to continue to face financial pressures throughout 2024. The next Bank of England rate decision is also due on Thursday. If people are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.

Which? is also calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help consumers struggling to make ends meet and ensure they are providing value for money.

Rocio Concha, Which? Director of Policy and Advocacy, said “It’s very worrying that missed payment levels are still so high – with almost one in 10 mortgage holders missing a household payment in a single month. We’d encourage anyone who’s struggling to seek free debt advice and reach out to their mortgage provider or landlord for help.

“As so many people face financial hardship, Which? is calling on businesses in essential sectors like food, energy and telecoms providers to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”

Commenting on the research David Cheadle, Chief Operating Officer at National Debtline, said “This high level of missed payments shows the impossible choices being faced by millions of households in this time of high costs.  

“With both mortgage and rent payments up significantly, household finances are under increasing pressure.  We can sadly expect many more people to fall into problem debt in the coming months. 

Alastair Douglas from TotallyMoney said “Almost one in ten people missed a payment on housing, bills or loans last month — a clear indication that the cost of living crisis is far from over. And in just a few weeks, finances will become even more strained, as broadband and mobile firms hike prices by up to almost 9%, council tax increases by 5%, and water bills boil above the inflation rate, rising by 6.1%.

“A third of people believe their situation will get worse this year, highlighting not just the financial pressure they’re under, but also the impact it’s having on their wellbeing. Promises from the Prime Minister this week, that the economy has ‘really turned the corner’ will neither fill voters with confidence, nor their pockets with money.

“Real support is needed from the government, and the Financial Conduct Authority needs to reiterate its message that support is available for struggling mortgage customers. Meanwhile, banks need to be proactive in contacting people before they miss payments, and other providers should be showing customers their options before sleepwalking them into higher bills next month.”