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Third of mortgage holders cut back on essentials as living costs surge

Paloma Kubiak
Written By:
Paloma Kubiak

A third of people with a mortgage have reduced their spending on food and essentials due to the rising cost of living, stark figures reveal.

Data from the Office for National Statistics (ONS) on how people were coping with increased costs showed the proportion of people cutting back on food and essentials rose to 46% for renters. 

Some 42% of those in shared ownership schemes, paying part mortgage part rent, had reduced their spend on essentials. 

The ONS said this was likely because those in rented housing tended to see cost increases in other areas, while mortgage holders on fixed rates are protected from rising housing. Renters, however, are exposed to higher rents. 

Some 16% of mortgage holders said they were using more credit than usual to cope, such as credit cards and loans, while a quarter relied on savings. 

For renters, 19% turned to sources of credit while 23% used their savings. 

Overall, the figures showed that the cost of living had risen for 89% of adults, which the ONS equated to 46 million people in Britain. This was up from the 62% who reported rising costs when first asked in November 2021. 

Some 94% said the price of their food shop had increased, 82% said this was down to rising gas and electricity bills and 77% attributed this to hiked up fuel prices. 

For 24 million people in Great Britain, they were reducing energy use in their home between March and June 2022, and around 16 million cut back on food and essentials to cope with the rising costs.

By pay scale, the ONS revealed 39% of those with an income between £10,000 and £15,000, £15,000 and £20,000, or £20,000 to £30,000 per year were cutting back on food and essentials.

‘Don’t bury your head in the sand’

Laura Suter, head of personal finance at AJ Bell, said: “The figures show the difficult decisions people are already having to take, with more than a third of the nation having to cut back on food and essentials in an effort to make ends meet. The cost-of-living crunch means certain groups feel the pinch more than others.

“Disabled people are more likely to have to cut back on food and essentials, as are people living in deprived areas. Those renting are also more likely to have slashed their spending, with many citing rising housing costs as one of the key factors contributing to their rising living costs. However, as more homeowners come off their cheap fixed rate mortgages and roll on to pricier deals we’ll likely see them feel the crunch more too.”

She added these figures are likely “Just the tip of the iceberg” as they run up to the start of summer, before energy bills are set to soar this winter.

“The fact that 24 million people are already trying to use less energy in their home, before we’ve even hit the next wave of higher prices and the increase in energy use in winter, shows just how tough the next six months are going to be. It’s inevitable that the current 16 million people who are cutting their food costs will continue to grow in number over the coming months, as prices keep rising and wages fail to keep up.”

Suter added: “The best thing anyone who is struggling now can do is to work out whether they can afford the next increase in energy bills or food prices rises and figure out a plan if they can’t. Energy companies, mortgage providers and banks are all prepared for people to struggle with affordability, but it’s much better to work out a plan before missing a payment, rather than burying your head in the sand and hoping for the best.”