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One in four mortgage holders has used credit to keep up with existing borrowing commitments, as mortgage arrears rise across the UK

9 May 2024

New polling by YouGov for StepChange Debt Charity shows that nearly one in four (23%) UK mortgage holders has turned to some other form of credit or borrowing in the last three months so that they could keep up with existing borrowing commitments.

This comes as the Bank of England is expected to hold interest rates today for the sixth consecutive time at 5.25%, and UK Finance has revealed a rise in mortgage arrears.

Additionally, the polling reveals that one in six mortgage holders (16%) have borrowed on their credit card in the past three months so that they can keep up with other bills, a higher proportion than those living in other housing tenures. StepChange research demonstrates that borrowing to keep up with existing credit commitments is a red flag indicator of financial difficulty.

With the Financial Conduct Authority set to review the impact of the Mortgage Charter by the end of June, StepChange believes it is too early to step away from the additional support it provides.

StepChange says that while it won’t be a surprise if interest rates are held today, those on expiring mortgage deals needing to secure a new rate will have been hoping for some respite by now – yet average new fixed rates are still just shy of 6%, often more than double the rate on the expiring deal.

Today, UK Finance announced homeowner mortgage in arrears of 2.5% or more rose by 3% in the first quarter of 2024, compared to the previous quarter, showing that the debt pressure for many homeowners remains acute. However, the rise year on year is substantial – there were 96,580 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the first quarter of 2024, compared to 76,680 in the first quarter of 2023.

Homeowners generally understand that paying their mortgage is a top priority. This makes it especially worrying to see mortgage arrears going up, and suggests some households who may already have fallen behind on other commitments are now reaching a point where even their mortgage payments are at risk. It’s clear that a sustained period of higher bills and housing costs have eroded people’s savings and overall ability to make ends meet.

For anyone struggling to afford their mortgage, it’s important to let your lender know as early as possible – they have a regulatory responsibility to try to help. StepChange’s impartial guides give many useful tips and pointers to help anyone feeling the pressure of mortgage debt.

Richard Lane, Chief Client Officer at StepChange, says:

“Most of the people currently seeking our help are tenants, but homeowners facing payment shock at the end of expiring deals are often the clients facing the most sudden, acute cliff edges of unaffordable cost hikes.

“There are still hundreds of thousands of people set to face this kind of payment shock this year – the problem hasn’t yet gone away. So it’s crucial that Government continues to do everything possible to reduce the risk of people losing their homes as a result of mortgage rate hikes. This includes potentially extending the life of the Mortgage Charter, that goes above and beyond the normal forbearance measures already expected of mortgage lenders.

“In the meantime, any homeowner struggling to keep on top of bills should know that help is available. Not only are mortgage lenders duty bound to try to help, but services like StepChange can help you look at your finances in the round, not just your mortgage, and advise on solutions to help you achieve an affordable and sustainable budget.”

Notes to Editors

  1. All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2,142 adults, of which 558 were mortgage owners. Fieldwork was undertaken between 3rd - 7th May 2024.  The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).
  2. UK Finance data on mortgage arrears and possessions can be found here.

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