7m mortgage holders struggling with household bills

Seven million mortgage holders struggling to keep up with household bills and credit commitments

New polling from StepChange Debt Charity has revealed 45% of mortgage holders, equivalent to 6.9m UK adults, have found it difficult to keep up with bills and credit commitments in the last few months.

The new figures, which come as the Bank of England is expected to again raise interest rates today, show that two fifths of mortgage holders (40%) are showing at least one sign of financial difficulty, while one in ten (10%) mortgage holders are estimated to be in problem debt.

In some instances, mortgage holders are more likely to be showing signs of financial difficulty than the wider UK population, including:

• Mortgage holders (20%) are more likely to have made just the minimum repayments on their debts compared to the wider UK population (16%).

• Mortgage holders (15%) are also more likely to have used credit, loans or overdraft to make it through to payday compared to estimate for UK adults (10%).

With the peak in interest rates further away than initially expected, StepChange Debt Charity says home-owners are now facing a prolonged squeeze on their finances, which may not necessarily present as mortgage arrears, but as people falling behind with bills or other credit commitments as they struggle to make ends meet.

Vikki Brownridge, CEO at StepChange Debt Charity, said:

“In a short space of time StepChange’s mortgage advice team has seen a sharp rise in the cost of borrowing among clients, who are facing on average an approximate £300 jump in monthly payments for a typical sized mortgage now compared to before September 2022.

“While our figures show that increased pressure is not yet bringing more homeowners to debt advice, the risk is there as people cut back on spending or turn to credit to keep up with essentials and the wider cost of living. The government and lenders must be attuned to this issue with millions of people due to experience eye-watering rises in their monthly mortgage payments.

“The FCA has renewed its guidance to lenders to treat borrowers fairly, and we would urge all firms to proactively engage with and support customers showing signs of financial difficulty early, as well as providing effective signposting to free debt advice.

“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. We have a dedicated free mortgage advice service, which is open to anyone, whether they are currently in problem debt or not.”