Seven million households have struggled to pay their rent or mortgage in 2023
Around seven million households have struggled to pay for their mortgage or rent payments this year, a consumer champion reveals.
A total of 60% of the 4,000 respondents surveyed by Which? were fearful of their financial security and half do not feel ‘in control’ of their money, with one in five taking on extra work to cover utility bills.
Even the mood of those who have paid off their mortgage was concerning, as three in 10 of those who own their home outright said they felt financially stressed on a daily basis.
After fourteen months of consecutive interest rate hikes, both renters and mortgage holders have been hit in the pockets hard. This month YourMoney.com reported an average household with a mortgage had £337 left at the end of each month, with that number dropping dramatically to just £137 for renters.
Landlords have, for the most part, continuously upped their rent for over two years, and the average monthly charge now stands at £1,260 – over £200 more than in August 2021, HomeLet’s data shows.
More support needed
Which? is “calling on banks and mortgage lenders to ensure they are ready to properly support high numbers of customers getting in touch.”
It continued: “This includes making sure that customer service support – via phone calls, email and chat functions – is properly staffed and resourced in the months to come.
“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.”
The consumer champion also provided tips on what to do if you’re struggling with housing costs.
Rent support options
If you’re finding it hard to keep up or have already missed a payment, you should contact your landlord as soon as possible.
They may be willing to discuss a compromise that will enable you to keep living in the property, such as reducing your monthly bills for a set period. But they aren’t obliged to offer support.
Tenants in England or Wales may be able to qualify for the Debt Respite Scheme – also known as Breathing Space. This gives you a 60-day window in which the landlord won’t be able to take enforcement action.
A similar scheme called a ‘moratorium’ exists in Scotland. This offers protection from legal action over unpaid debts for a period of six weeks.
Mortgage support options
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, switching to interest-only payments or extending the term of your mortgage.
Taking one of these options will offer short-term relief and allow you to get your finances in order, but you will end up paying more back in the long run.
For example, switching to interest-only for six months will mean your mortgage will take longer to pay off, as you won’t be increasing the equity you own during this time and only paying off the interest.