A worrying number of UK adults, estimated at 3.2 million, have missed significant payments over the last two years, according to a new study conducted by The Mortgage Lender.
This represents 6% of the UK adult population who have struggled with major expenses, including rent, mortgage, or credit card payments, during the time marked by the pandemic.
The research further showed that 4% of UK adults missed multiple payments, indicating a sizeable proportion of people who have been financially strained during the pandemic and may now be dealing with adverse credit.
Young adults have been the hardest hit, with instability in employment being a major contributing factor. More than a tenth (11%) of 18-34 year-olds have missed at least one regular payment in the past two years, a figure nearly four times greater than that of over-55s (3%). Furthermore, 6% of young adults have admitted to missing multiple payments.
This trend is particularly concerning given that missed payments can significantly impact a person’s ability to access credit in the future, including large loans like mortgages. The research revealed that 10% of prospective homebuyers missed one or more payments in the past two years, a factor that could lead to their mortgage application being rejected.
Among all adults who admitted to missing a payment, the average number of payments missed was three, with almost a third (31%) missing five or more. The majority of missed payments were credit card payments, comprising 45% of the total. Other frequently missed payments included utility bills (40%), council tax (27%), rent payments (25%), personal loan repayments (23%), and mortgage repayments (7%).
Peter Beaumont (pictured), CEO of The Mortgage Lender, said: “The past two years have impacted many people’s jobs and salaries, putting a squeeze on household finances, and with the rising cost of living there is even greater pressure on the nation’s finances. This can all lead an individual to miss a regular payment which then could have a knock-on effect on their access to credit down the line.”
He went on to suggest that the lending market needs to adapt to these changes: “In such a volatile economic climate, it’s important that more people are prevented from falling down a rabbit hole of financial difficulty.
“The lending market needs to become better equipped to deal with the greater quantities of people who are emerging from the pandemic with adverse credit histories. Rather than penalising people for the consequences of an unprecedented event, the industry should be working together to support those who’ve missed payments so that people, especially aspiring homeowners, aren’t locked out of the market.”
