Pressure on borrowers mounts as interest rates continue to rise

The Bank of England Monetary Policy Committee has today voted to increase interest rates to 2.25 percent, a rise of 0.5 percentage points.

The further rise in rates comes a day after new research showing the significant impact rising bills are already having on peoples’ day-to-day-lives was published by the Money Advice Trust, the charity that runs National Debtline and Business Debtline.

The findings reveal that:

• an estimated 10.9 million (21 percent) of UK adults are already behind on one or more household bill, an increase of 3 million people since March 2022
• one in nine (5.6 million) have gone without food as a result of the cost of living crisis
• five percent of UK adults said they are currently behind on their mortgage repayments – an increase of 2 percentage points from March this year
• 15.3 million people (29 percent) say they have had to use credit to pay for essentials – an increase of 2.1 million since March 2022.

Joanna Elson CBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: 

“Rising prices are already having a severe impact on millions of people and tackling high inflation is important in reducing the pain many households are experiencing.

“Today’s further increase in interest rates, however, comes at a time when millions of peoples’ budgets are already at their limit.  Our findings show that five percent of UK adults say they are struggling to meet mortgage repayments, and for many homeowners, this rise will add to their concerns.  For those on variable mortgages, the challenge is more pressing.  With repayments likely to rise immediately, this will heap more pressure onto many already precarious situations.

“Anyone worried about their mortgage repayments should contact their lender.  Creditors also need to ensure people struggling to pay are treated fairly, including offering payment deferrals and pausing collection activity when appropriate.

“You can also contact a free debt advice service like National Debtline, who will be able to take you through your options based on your circumstances.

“Small business owners are also facing real pressures from rising prices and I would encourage any small business owners who are worried about their finances to contact Business Debtline.”

National Debtline offers free, independent debt advice at www.nationaldebtline.org.

Business Debtline provides free, impartial debt advice for small business owners and the self-employed at www.businessdebtline.org