New data from consumer watchdog Which? indicates that an estimated seven million households across the UK are having difficulty meeting their rent or mortgage payments.
The survey, which polled 4,000 people, found that 46% of households either renting or with a mortgage are struggling financially, a number that is predicted to rise as interest rates continue to increase.
Bank of England data corroborates this troubling trend, revealing that nearly half of all mortgage holders—approximately 4.5 million households—have already seen hikes in their monthly payments.
Despite the Bank of England’s decision last week to maintain interest rates, nearly one-third of homeowners—roughly 2.1 million households—could face financial hardship as their fixed-rate mortgage deals conclude by the end of 2024.
Concerns are not confined to those on lower incomes. One man from Northern England, earning between £55,000 and £79,999, expressed significant worry about upcoming increases in interest rates, stating he is “immensely worried about how we can afford to cover bills.”
Renters are also likely to bear the brunt of rising interest rates, as landlords may increase rents to offset their higher mortgage payments.
One woman from South England on an income of £10,000 – £14,999 said: “I worry about the roof over my head and the fact my rent is about to increase because I cannot afford to pay the increase.”
To cope with these financial pressures, households are resorting to tapping into their savings; 31% of mortgage holders have done so to cover housing costs—the highest rate among all housing tenures.
A quarter of both private and social renters have also had to dip into their savings to make rent payments. This leaves these households with less financial cushion for emergencies and restricts their ability to benefit from higher saving rates.
The ongoing struggle to make housing payments is also impacting emotional well-being. Over half of mortgage holders (52%) and renters—55% of social renters and 56% of private renters—report feeling daily stress.
About two-thirds of these groups are also anxious about their financial security, and over half feel like they’re not in control of their money.
Rocio Concha, Which? Director of Policy and Advocacy, said: “It’s hugely concerning that seven million households are already struggling to keep up with rent or mortgage payments—with millions more set to remortgage at higher rates by the end of 2024.”
In light of these findings, Which? is urging banks and mortgage lenders to prepare for a surge in customer contacts by ensuring their customer service support channels are fully staffed and resourced. The Financial Conduct Authority’s new Consumer Duty is also set to hold firms to higher standards of customer service, with companies facing stringent action if they fail to comply.
For those concerned about their financial situation, contacting mortgage providers or landlords to discuss individual circumstances is advised. Various support options are available, such as temporary mortgage holidays or extending the term of mortgages. Renters can also seek temporary assistance from their landlords.
