Half a million families struggle to pay mortgage
According to Resolution Foundation, another 590,000 families privately renting cannot afford their monthly payments and 100,000 social renters will also struggle. Unaffordable housing payments are defined as those representing more than 35% of the family’s net income.
Vidhya Alakeson, deputy chief executive from Resolution Foundation, said: “Many families are struggling to find any type of housing which fits both their needs and their budget. Often they are making difficult choices which mean going without other essentials to pay their housing bills or living in overcrowded conditions – all this at a time when other living costs are rising.”
“We’ve become used to the idea that buying a property is now an impossible dream for millions of people on low to middle incomes – in a typical case it would take 22 years just to save the deposit. But increasingly, private rent is also becoming unaffordable even though, for many families, it is the only option.”
London has the highest proportion of low income families with unaffordable housing costs, followed by the South East and the North West and Mersey. Overall, two-thirds of low-income families are based outside London and the South East.
Jane King adviser at Ash Ridge Asset Management said reduced income due to loss of jobs or other debt problems could leave families struggling to repay their mortgages: “It is human nature to pay your mortgage first. If people are struggling to pay their mortgage they are in deep trouble.
“What worries me is what happens when interest rates do go up. A rise of 0.5% would tip a lot of people over the edge. Hopefully we are looking at low interest rates for a long time.”