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StepChange responds to base rate rise

3 August 2023

StepChange Debt Charity has responded to the news from the Bank of England that the base rate has risen by 0.25%. Even with predictions that the rate may stabilise now, homeowner and renters’ finances are already under immense pressure, amidst a continually high cost of living.

Richard Lane, Director of External Affairs at StepChange Debt Charity, said:

“Whilst some reports suggest that the base rate may not rise much further if at all beyond today’s 0.25% hike, this latest increase will still be difficult news for millions of people’s finances. Those who have already fixed onto a new mortgage rate in the last few months will be facing significantly higher monthly payments, while many landlords have already passed on higher debt servicing costs to their tenants, making the private rented sector increasingly unaffordable to renters on low and middle incomes.

“With no certainty over how long rates will remain high for, the cost of living will continue to push people into difficulty. While StepChange hasn’t yet seen a rise in the proportion of clients with mortgage arrears, it’s likely that this could start to shift over the coming months, as homeowners’ financial resilience takes a knock from increasingly squeezed budgets.

“Earlier this week the FCA’s new Consumer Duty came into effect, and part of this sets out what is required of firms for supporting customers experiencing financial difficulty. This is an opportunity for lenders to make sure they are effectively identifying customers who are struggling and offering tangible and tailored support.

“For anyone worried about meeting their housing costs, or struggling with problem debt more generally, StepChange provides free and impartial advice, both online and over the phone. We also have a dedicated hub for homeowners, and offer free mortgage advice and mortgage debt advice, to help people explore and understand their options, whether or not they’re currently experiencing financial difficulty.”

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