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Seven million mortgage holders struggling to keep up with household bills

Nick Cheek
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Nick Cheek

Nearly half of mortgage holders are struggling to keep up with bills and credit agreements over the past few months, a charity has said.

A survey complied by the StepChange Debt Charity revealed that 45% of mortgage payers, or 6.9 million adults are facing an uphill battle to make ends meet.

Overall, 40% of mortgage holders are showing at least one sign of financial pressure, while one in ten of those with mortgages are estimated to be in problem debt.

The news that the Bank of England has elected to raise the base rate by half a point to 5%, the highest that it has been for 15 years, will come as a further significant blow to household finances.

As the interest rate peak has almost certainly not been hit yet, with inflation remaining high and ‘sticky’ at 8.7% in the year to May, more pressure on finances can be expected.

Mortgage holders are also more likely to be showing the signs of financial strain than is experienced by the wider population in the UK.

It was found that a fifth of mortgage holders have probably made just the minimum repayments on their debts, compared to 16% across the UK population.

And 15% of mortgage holders are also more likely to have turned to credit, loans or overdrafts to make it through to payday, in contrast to an estimate of 10% of adults by the charity.

Sharp increase in cost of borrowing to blame

Vikki Brownridge, the CEO at StepChange Debt Charity, said: “In a short space of time, StepChange’s mortgage advice team has seen a sharp rise in the cost of borrowing among clients, who are facing, on average, an approximate £300 jump in monthly payments for a typical-sized mortgage now compared to before September 2022.”

“While our figures show that increased pressure is not yet bringing more homeowners to debt advice, the risk is there as people cut back on spending or turn to credit to keep up with essentials and the wider cost of living.

“The Government and lenders must be attuned to this issue with millions of people due to experience eye-watering rises in their monthly mortgage payments.

“The FCA has renewed its guidance to lenders to treat borrowers fairly, and we would urge all firms to proactively engage with and support customers showing signs of financial difficulty early, as well as providing effective signposting to free debt advice.”

“If you’re worried about meeting your mortgage payments, it’s never too soon to get support – speak to your lender about your options or seek free and impartial debt advice from a charity like StepChange.”

“We have a dedicated free mortgage advice service, which is open to anyone, whether they are currently in problem debt or not.”