New findings from StepChange Debt Charity reveal that around 45% of UK mortgage holders, equivalent to 6.9 million adults, are grappling with keeping up with household bills and credit commitments.
The data, released on the day the Bank of England is poised to further increase interest rates, show that financial distress is increasingly evident amongst homeowners.
About 40% of mortgage holders display at least one sign of financial difficulty, with an estimated 10% deemed to be in significant debt.
Mortgage holders are notably more likely to be demonstrating signs of financial difficulty than the broader UK population. Approximately 20% of mortgage holders have made only the minimum repayments on their debts compared to 16% of the wider population. Similarly, 15% of mortgage holders have relied on credit, loans, or overdrafts to get by until payday, compared to 10% of all UK adults.
StepChange Debt Charity notes that homeowners are now confronting a prolonged squeeze on their finances due to the delay in the expected peak in interest rates. While this may not directly manifest as mortgage arrears, more and more people are falling behind with bills or other credit commitments as they struggle to cover essential costs.
Vikki Brownridge, CEO at StepChange Debt Charity, said: “In a short space of time, our mortgage advice team has observed a sharp increase in borrowing costs among clients, who are facing an average jump in monthly payments of around £300 for a typical-sized mortgage now, compared to before September 2022.”
Although the increased pressure has not led to a significant influx of homeowners seeking debt advice, the risk is high as people reduce spending or resort to credit to manage essential costs and the wider cost of living.
Brownridge stressed the importance of proactive support from lenders and effective signposting to free debt advice for customers showing signs of financial difficulty.
“If you’re worried about meeting your mortgage payments, it’s never too soon to get support. Speak to your lender about your options or seek free and impartial debt advice from a charity like StepChange,” she added.
StepChange offers a dedicated free mortgage advice service, open to anyone, regardless of whether they are currently in problem debt.
