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A third of mortgage holders struggle to afford payments

Paloma Kubiak
Written By:
Paloma Kubiak

A third of mortgage holders say they are finding it difficult to keep up with payments, official figures reveal.

Renters were more likely to be struggling with higher living costs, as 43% said they were finding it hard to afford the rent, according to the Office for National Statistics (ONS) Cost of Living survey covering 8 February to 1 May.

Overall, 35% of mortgage holders and renters reported that it was either very or somewhat difficult to afford housing payments. 

Among the adults surveyed, 96% said expenses rose because the cost of their food shopping had increased, 57% said energy bills and 37% cited the price of fuel. 

By comparison, mortgage and rent payments were having the least impact on the finances of adults in the UK as 27% gave this as the reason for their increased living costs. 

Renters under more strain 

Renters were found to be 4.7 times more likely to experience financial vulnerability compared to those who own their home outright. Mortgage holders were twice as likely. 

This could be because tenants spend more of their disposable income on rent than mortgage holders do on their mortgage, at a proportion of 21% for renters and 16% for mortgagors. 

This is according to the Living Cost and Food Survey for the 2022 financial year. 

The ONS survey found that in the last six months, 42% of renters said payments had risen compared to 32% of mortgage holders. Meanwhile 53% of people part renting, part paying a mortgage said these costs had gone up.

For some renters (14%), they said they were running out of food in the past two weeks of the surveyed period, while 3% of mortgage holders said the same. 

Just 4% of mortgage holders revealed they were behind on gas or electricity payments, while 13% of renters said the same. 

The poll found that 19% of renters had a direct debit or standing order that they were unable to pay in the last month within the surveyed period, compared to 4% of mortgage holders. 

Just 1% of mortgage holders were using support from charities and 8% of renters had sought assistance. 

When it came to saving up for the next 12 months, a quarter of renters said they would be able to, compared to 48% of mortgage holders.

Meanwhile, 22% of renters were already dipping into their savings to cover rising costs compared to 29% of people paying a mortgage. 

Further, 27% of people part renting, part paying a mortgage said they were using their savings to meet daily costs.

‘More pain to come’

Laura Suter, head of personal finance at AJ Bell, said: “The figures lay bare just how difficult some households are finding this drawn-out cost-of-living crisis. What we’re seeing emerge is a split society: those who are facing higher rent or mortgage costs thanks to rising interest rates are far more likely to be experiencing financial vulnerability, compared to older and wealthier people who own their own home outright and so are protected from the negative effects of rate hikes.

“But while prices might start to ease, reducing some of the pressure on household finances, these figures highlight that many homeowners have more pain to come. Only a third of mortgage holders have seen their costs increase in the past six months, highlighting just how many people haven’t yet faced the gauntlet of rising mortgage rates. As more people roll off their fixed rate deals onto far higher costs, we’ll see those struggling to keep up with payments increase.”