Credit, Collections & Insolvency News
According to Compare the Market’s latest Household Financial Confidence Tracker, over one in ten (13%) admit they are not confident in their ability to meet their mortgage repayments over the coming months.
57% of mortgage holders say they are unlikely to switch their mortgage to a new deal while rates remain at current levels. By contrast, if the Bank had lowered rates, 46% of mortgage holders said they would have been likely to shop around for a new deal, prompting lenders to compete for their business.
Many households recognise the important role of the Bank’s rate when it comes to their outgoings, with almost four in ten (39%) saying that they keep track of the base rate when managing their finances, including over half (51%) of 25–34-year-olds.
Higher for longer rates could see credit card holders struggle to navigate higher costs, as many are set to roll off initial 0% interest periods. Compare the Market’s research found that almost one in four credit card holders (24%) are nearing the end of their 0% period. A 0% credit card allows you to purchase items upfront and pay off the amount that you have spent over a set period without any interest. However, you need to always pay at least the monthly minimum payment and diarise to pay the card off or do a balance transfer when the 0% ends, to avoid additional charges. You may also be charged a fee for making the switch – typically between 1% and 4% of the amount you’re moving across.
Nearly half of UK households (46%) feel more pessimistic about their finances in comparison to this time last year, according to Compare the Market’s research. Due to the higher cost of living, more than one in four people (26%) do not feel confident in being able to manage their household bills in the coming weeks, with many people cutting back on non-essential expenses. These include eating out (49%), buying clothes (41%), holidays (37%), leisure activities (34%), large purchases like cars or computers (32%), and subscriptions (26%). More than one in ten (13%) are not confident in their ability to meet credit card repayments each month. Over one in four (27%) have also reduced the amount of money they are able to save each month, while a similar number (26%) are unable to save any money each month.
Guy Anker, Money Expert at Compare the Market, said “I’d encourage everyone to proactively look for savings where possible to avoid needlessly wasting potentially £100s or sometimes £1,000s a year.
“The good news is some mortgage providers have been lowering mortgage rates on their fixes and trackers in recent months, creating opportunities for some to switch to a more affordable deal. Standard variable rate (SVR) mortgages, which most people revert to when a fix or tracker ends, tend to be very expensive. So, if you’re on one, or you’ll end up on one in the next six months, check if you can save with a new deal.
“There could also be serious savings to be had if you pay interest on credit card debt. Depending on your credit rating, you may be eligible for a 0% balance transfer card that lets you shift debt to them, in some cases, for more than two years at 0% interest. There could be a fee of between 1% and 4% to make the switch.
“Staying on top of your finances could also involve making some difficult spending decisions, so it is important to create a budget and prioritise what is most important to you in case you need to cut back. Taking the time to shop around online can also help to ensure that you do not overspend unnecessarily or miss out on great deals’’
