In the wake of the Bank of England’s decision today to raise the base rate from 4.25% to 4.5%, StepChange Debt Charity is sounding the alarm about the potential impact on household finances.
The charity warns that this could exacerbate problem debt among mortgage holders nearing the end of fixed-rate deals and private renters facing increased costs passed on by their landlords.
Currently, around 15% of mortgage holders seeking assistance from StepChange are behind on their payments. Moreover, arrears on other household bills such as gas and electricity remain worryingly high among the charity’s clients.
Vikki Brownridge, chief executive of StepChange Debt Charity, responded to the latest rate rise, said: “The steep jump in interest rates we’ve seen over the past 12 months has been a shock to household budgets, compounding financial difficulty for people who are already struggling to make ends meet.
“As time goes on, more mortgage holders will be facing the prospect of a new fixed rate deal or variable rate which will consume a larger proportion of their income, making it increasingly difficult to meet other financial commitments.”
She further warned about the precarious situation many people are finding themselves in, with widespread problem debt becoming a real risk, particularly for financially vulnerable households. She urged firms to proactively identify and communicate with customers who might be falling into difficulty, offering tailored support and directing them to free debt advice.
