An estimated seven million households are struggling to keep up with their rent or mortgage payments, with millions more at risk of tipping into financial difficulty by the end of 2024 as they remortgage at higher rates according to analysis by Which?.
A survey of 4,000 people found nearly half of households (46%) with mortgages or who are renting have been struggling to keep up with their housing payments – which equates to an estimated seven million households across the UK.
According to Bank of England data, nearly half of all mortgage holders, around 4.5 million households, have already experienced increases in their monthly payments.
Despite the Bank of England maintaining interest rates last week, this pain is still to come for just under a third of homeowners – 2.1 million households – whose fixed-rate deals will finish by the end of 2024. This means millions more households could find themselves struggling to afford their bills.
As part of the research, one man from Northern England with an income of £55,000 – £79,999 said he is “immensely worried about how we can afford to cover bills. Our mortgage is due to renew later in [the] year and sounds like there will be further increase in interest rates”. This suggests that it is not just those on the lowest incomes who are being affected by the interest rate rises.
Renters are also likely to be affected by interest rate rises – as landlords whose mortgage repayments have gone up may raise rents to cover the increase. Many respondents expressed worry about these increases, with one woman from South England on an income of £10,000 – £14,999 saying: “I worry about the roof over my head and the fact my rent is about to increase because I cannot afford to pay the increase”
With pressures continuing to build on household finances, many have had to make financial adjustments to make ends meet. Nearly a third (31%) of mortgage holders have dipped into savings to pay their housing bills – the highest rate amongst all housing tenures.
Around a quarter or more of private (27%) and social renters (25%) have had to use their savings to cover rent. For all these households, dipping into savings means having lesser funds for emergencies and not being able to take full advantage of higher saving rates.
Nearly half of mortgage holders said they are monitoring their finances and budget more (45%) and one in five (21%) are working more hours to afford their housing bills. One woman from the Midlands on an income of £20,000 – £34,999 said: “All bills have gone up including mortgage (about £140 a month in the last year). My wages have not gone up so I am now having to work overtime to just get by.”
These housing worries are also affecting people’s emotional wellbeing. Half (52%) of households with a mortgage and more than half (55%) of social renters and private renters (56%) are feeling stressed on a daily basis compared to just three in 10 (28%) of households who own their homes outright.
Nearly two-thirds of mortgage-holders and renters (62% of households with a mortgage, 60% of social renters and 62% of private renters) are worried about their household’s financial security. Over half said they feel like they are not in control of their money (55% of households with a mortgage, 55% of social renters and 56% of private renters).
With many struggling to make ends meet or set to remortgage in the coming months, the consumer champion is calling on banks and mortgage lenders to ensure they are ready to properly support high numbers of customers getting in touch. This includes making sure that customer service support – via phone calls, email and chat support – is properly staffed and resourced in the months to come.
Those concerned about their ability to make mortgage repayments should contact their lender in the first instance. This will not affect their credit score and lenders can offer a range of support options depending on individual circumstances – such as a temporary mortgage holiday or extending the term of your mortgage.
The Financial Conduct Authority’s new Consumer Duty, which holds firms in financial services to higher standards of customer service, should mean that customers are supported throughout in a way that meets their financial needs. Companies that fail to do so should expect to face tough action from the regulator.
Rocio Concha, Which? Director of Policy and Advocacy, said “It’s hugely concerning that seven million households are already struggling to keep up with rent or mortgage payments – with millions more set to remortgage at higher rates by the end of 2024. We’d encourage anyone who’s struggling to seek free debt advice and reach out to their mortgage provider or landlord for help.”
“Banks and mortgage lenders must also ensure they are fully staffed and properly prepared to properly support customers getting in touch to remortgage or because they are struggling to make ends meet.”