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A Which? survey of 4,000 consumers in March 2023 reveals nearly half of households with a mortgage or rent bill have been struggling to keep up with their payments – equating to an estimated seven million UK households.
The struggles – which are expected to continue next year – have seen many dip into their savings and take on more hours at work.
Here, we delve into the results of our research and offer advice on what you can do if your household finances are pinched.
A wide spectrum of people, ranging from high-earners to low-earners, have expressed worry over their rising bills.
One man from northern England on an income of £55,000-£79,999 told us that he's 'immensely worried' about having to soon remortgage, while a tenant from the South on an income of £10,000-£14,999 said: 'I worry about the roof over my head and the fact that my rent is about to increase because I can't afford to pay the increase.'
Almost a third of mortgage holders and a quarter of renters have dipped into savings to pay their housing bills.
Worries over housing bills are also affecting people’s emotional wellbeing.
Half of mortgage-holders and renters are feeling stressed on a daily basis compared with just three in 10 households who own their homes outright.
Six in 10 are fearful of their financial security, and more than half don't feel in control of their money. One in five are also working more hours to cover their housing bills.
A woman from the Midlands said: 'All bills have gone up including the mortgage (about £140 a month in the past year). My wages have not gone up, so I'm now having to work overtime to just get by.'
Mortgage rates have soared thanks to consecutive base rate rises since December 2021 and although rates are coming down, they remain much higher than a couple of years ago.
In September 2021, someone taking out a two-year fix with 25 years left on their loan would, on average, have paid £885 a month. However, someone in that same scenario today would be paying £1,355 a month – a £470 difference.
Millions of households have already experienced increases in their monthly mortgage payments this year, but around 2.1 million more households could face the pain next as their fixed-rate deals are set to finish by the end of 2024.
Anyone coming up to remortgage can lock in a new rate up to six months in advance of their term expiring. They can then switch to a better rate with the same lender before the new term kicks in.
Find the right mortgage using the fee-free service provided by L&C Mortgages
Compare mortgagesIf you click on the link and complete a mortgage with L&C Mortgages, L&C is paid a commission by the lender and will share part of this fee with Which? Ltd helping fund our not-for-profit mission. We do not allow this relationship to affect our editorial independence. Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Those concerned about their ability to make mortgage repayments should contact their lender in the first instance.
This won't affect their credit score and lenders can offer a range of support options depending on individual circumstances, such as a temporary mortgage holiday, switching to interest-only payments or extending the term of your mortgage.
Taking one of these options will offer short-term relief and allow you to get your finances in order, but you'll end up paying more back in the long run.
For example, switching to interest-only for six months will mean your mortgage will take longer to pay off, as you won't be increasing the equity you own during this time and only paying off the interest.
As with homeowners, renters are also likely to be affected by interest rate rises as landlords whose mortgage repayments have gone up may raise rents to cover the cost.
Rental bills are currently the highest they've ever been, and there are little signs of costs being scaled back. According to the latest HomeLet Rental Index, the average annual rent for new lets is £15,132 – that's £1,416 more than 12 months ago.
If you're finding it hard to keep up or have already missed a payment, you should contact your landlord as soon as possible.
They may be willing to discuss a compromise that will enable you to keep living in the property, such as reducing your monthly bills for a set period. But they aren't obliged to offer support.
Tenants in England or Wales may be able to qualify for the Debt Respite Scheme – also known as Breathing Space. This gives you a 60-day window in which the landlord won't be able to take enforcement action.
A similar scheme called a 'moratorium' exists in Scotland. This offers protection from legal action over unpaid debts for a period of six weeks.
Which? is calling on banks and mortgage lenders to ensure that they're ready to properly support high numbers of customers getting in touch. This includes making sure that customer service support – via phone calls, email and chat functions – is properly staffed and resourced in the months to come.
The Financial Conduct Authority’s new Consumer Duty, which holds firms in financial services to higher standards of customer service, should mean that customers are supported throughout in a way that meets their financial needs. Companies that fail to do so should expect to face tough action from the regulator.
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